July IPCA suffers a contraction of 0.68%, the lowest rate since the beginning of the historical series in 1980

July IPCA suffers a contraction of 0.68%, the lowest rate since the beginning of the historical series in 1980

The Broad Consumer Price Index (IPCA) for July was released on Tuesday morning (9), marking the first contraction in more than two years.

Under pressure from lower fuel prices, especially gasoline, ethanol, and electricity, the IPCA was -0.68% in July, after a change of 0.67% in June. It is the lowest rate recorded since the beginning of the historical series that began in January 1980. In the year the cumulative inflation was 4.77% and in the last twelve months 10.07%.

Forecast market agents consulted Refinitiv The contraction ranged between 0.3% and 0.8%. The median forecast pointed to a negative IPCA of 0.65% in July compared to May. On a yearly basis, expectations were 10.10% higher.

Petrobras announced on July 20 a 20-cent reduction in the average price of fuel sold to distributors. In addition, we also had Supplementary Law 194/22, enacted at the end of June, that cut ICMS’ fuel, electricity and communications system down. This reduction affected not only the transportation group (-4.51%), but also the housing group (-1.05%), due to electricity (-5.78%). It was these two groups, the only group with a negative difference in the index, that lowered the score,” explains research director, Pedro Kislanov.

Gasoline prices fell 15.48% and ethanol prices fell 11.38%. Benzene, individually, contributed the largest negative effect among the 377 sub-elements that make up the IPCA, at -1.04 percentage point (r). In addition, there was also a decrease in vehicle gas prices by -5.67%.

The researcher also highlights that in addition to the reduction of the ICMS rate imposed on electricity services, another factor that influenced the decline of the housing group was the approval of the National Electric Energy Agency (ANEEL) for the extraordinary revisions of the ten tariff. distributors across the country, bringing tariffs down from July 13.

Clothes inflation slows down

Another group that contributed to the outcome of inflation was clothing, which slowed from 1.67% to 0.58%, after presenting the largest positive disparity between groups surveyed in May and June. “We saw a very sharp drop in the price of cotton, one of the main raw materials for the textile industry, at the end of June,” Pedro explains. Men’s clothing rose from 2.19% in June to 0.65% in July, while women’s clothing rose from 2.00% to 0.41%. Shoes and accessories (1.05%), in turn, had a slight variance from the previous month, when it registered 1.21%.

The Health and Personal Care group also showed a slowdown (0.49%) due to the smaller variance in health plans values ​​(1.13%), compared to June (2.99%), and for a decrease of 0.23. % of personal hygiene items compared to a rise of 0.55% in June.

On the other hand, the food and beverage sector accelerated in July. The group had the largest change (1.30%) and a positive effect (0.28 percentage points) on the index during the month. The result was driven by long-life milk, which rose more than 25%, and dairy products such as cheese (5.28%) and butter (5.75%), for example. This increase in the product is mainly due to two factors: first, because we are off-season, which runs from March to September and October, i.e. a period when the pastures are drier and this reduces the supply of milk in the market and the fact that production costs are very high”, comments the Director of Research .

The increase in milk particularly contributed to the House Food Score, which accelerated from 0.63% in June to 1.47% in July. Another benefit was fruit, an increase of 4.40% and a 0.04-pg impact on the IPCA in July. On the declines side, the biggest drop in prices came from tomatoes (-23.68%), potatoes (-16.62%) and carrots (-15.34%), which together contributed -0, 12 points.

The personal expenses group accelerated (1.13%) m/m (0.49%) and contributed the second largest positive impact (0.11 pages) to the IPCA in July. The two most notable features were the subsidiary housekeeper (1.25%) and cigarettes (4.37%), the latter due to adjustments of between 4.44% and 8.70% in the prices of products sold by one of the companies surveyed, as of July 3.

All regions have negative variance in July. The smallest change was recorded in Goiânia (-2.12%), which affected the 21.57% decrease in gasoline prices and 14.90% in electricity prices. The biggest change, in turn, was in São Paulo (-0.07%), the only region that recorded an increase in electricity (0.37%) in the month. Additionally, increases in long-term milk production (21.95%) and residential rents (1.85%) contributed to the region’s outcome.

INPC down 0.60% in July

The National Consumer Price Index (INPC) was -0.60% in July, the lowest discrepancy recorded since the start of the historical series that began in April 1979. The index is 4.98% higher in the year and 10.12% in the last year. 12 Months. Food products increased from 0.78% in June to 1.31% in July. Non-food items increased from 0.57% to -1.21%.

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