IPCA: inflation accelerates to 0.89% in November, the largest increase of the month in 5 years | economy

“This is the highest result of a month in November since 2015, when the indicator was 1.01%,” reported the IBGE.

It is also the largest monthly increase since December 2019 (1.15%).

In the accumulated of 2020, the IPCA registered an increase of 3.13% and, in 12 months, 4.31%, above the 3.92% observed in the immediately previous 12 months. As a result, inflation is now well above the center of the government’s inflation target for this year, which is 4%..

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OR the result was above the ceiling of expectations 29 consulting firms and financial institutions consulted by Valor Data, an increase of 0.86%. The projection floor was 0.68% higher and the median, 0.77% higher.

A price increases reached the 16 regions surveyed by IBGE. The highest result was registered in Goiânia (1.41%) and the lowest was registered in Brasilia (0.35%). In São Paulo and Rio de Janeiro, the HICP for the month was 1.04% and 0.69%, respectively.

Of the 9 groups of products and services surveyed, 7 were discharged in November.

See the result of each of the 9 groups surveyed:

• Food and beverages: 2.54%
• Housing: 0.44%
• Articles of residence: 0.86%
• Clothing: 0.07%
• Transport: 1.33%
• Health and personal care: -0.13%
• Personal expenses: 0.01%
• Education: -0.02%
• Communication: 0.29%

The greatest variation (2.54%) and the greatest impact (0.53 percentage point) came, once again, from the Food and Beverages group, which accelerated compared to October (1.93%). The second largest contribution (0.26 pp) came from Transportation (1.33%). Together, the two groups accounted for about 89% of the November IPCA.

Household items (0.86%) slowed compared to the previous month (1.53%), as well as clothing (0.07% in November, compared to the increase of 1.11% in October). The prices of the groups of health and personal care (-0.13%) and education (-0.02%) presented deflation.

Food has risen 12.14% in the year

Among the foods that increased the most in November, the highlights meats (6.54%), potato (29.65%), tomatoes (18.45%), rice (6.28%), soybean oil (9.24%) and beer (1.33%)). On the side of the falls, the highlight was the long-life milk (-3.47%).

Inflation of food away from home also accelerated from October (0.36%) to November (0.57%), driven by the price of food (0.70%).

In the year, the food and beverage group accumulated an increase of 12.14%, the highest advance since 2002. In 12 months, the increase is 15.94%.

Among the items that weighed the most in the Brazilian dish in the year, soybean oil (94.1%), tomatoes (76.51%), rice (69.5%) and meat (13.9%) stood out.

“What has influenced the most in recent months is the increase in food, which can be explained by two factors: on the one hand, there is an increase in demand, sustained by the aid granted by the government and, on the other, the restriction of offers in the domestic market in a context of higher exchange rates, which stimulates exports “, said the research manager, Pedro Kislanov, emphasizing that the economy is still in a recovery scenario, without pressure from demand over prices.

The researcher pointed out that, in the accumulated in 12 months (4.31%), the IPCA has the same variation registered in December of last year, again influenced by the price of food, but with different characteristics.

“In December of last year it was related to a specific item, which was meat. Now we have a similar situation, which is the rise in food prices, but with a differential (price increase) in various items, some with more than 50% increase, and even more than 100% ”, he compared.

In transportation, the greatest pressure on the general index in the month (0.08 percentage point) came from gasoline (1.64%), whose prices have risen for the sixth consecutive month. Among fuels (2.44%), the strong increase in ethanol (9.23%).

It is also worth noting the high prices of new (1.05%) and used (1.25%) cars, which accelerated compared to the previous month (when they registered 0.61% and 0.35%, respectively).

Service inflation slows

Service inflation slowed or from 0.55% in October to 0.39% in November. “This slowdown was due to airfare, which increased 3.22% in November after an increase of almost 40% in October,” explained the research manager.

Kislanov also pointed out that of the 38 services surveyed, 22 were discharged in November. In the previous month, 24 registered a price increase.

The biggest increase in the month was in the transport of applications (7.69%), while the biggest drop in prices was registered in cinemas and theaters, with a deflation of 1.13%.

The so-called Diffusion Index, which measures the proportion of goods and activities that experienced price increases, also fell from 68.2% in October to 66.6% a month later, according to Valor Data calculations considering all the items in the basket. . In September, the indicator was 63.4%.

INPC changes 0.95% in November

The National Consumer Price Index (INPC), a reference index for salary readjustments and social security benefits, rose 0.95% in November, after a 0.89% rise in October. In the year, the INPC accumulated an increase of 3.93% and, in the last twelve months, of 5.20%, above the 4.77% registered in the immediately previous 12 months.

Price adjustments and outlook

Analysts began to project inflation for 2020 above the central government’s 4% target. The market expectation for this year went from 3.54% to 4.21%, according to the latest Focus survey from the Central Bank.

The projections were revised after the National Electric Energy Agency (Aneel) authorized an extra charge on the electricity bill in December. In recent months, the higher level of the dollar and the recovery of the economy also contributed to the rise in prices, mainly for food and fuel.

Last Thursday (3), Petrobras announced another readjustment of 5% of the gas cylinder to the distributors.

The increase in the cost of living has weighed more heavily on the pockets of the poorest. The FGV index that measures the variation in prices of products and services for families with incomes between one and 2.5 times the minimum wage, for example, accumulates a maximum of 5.82% in 12 months until November.

Despite the acceleration in this final part of the year, official inflation is still within the existing tolerance range. Under the current rule, the HICP can range between 2.5% and 5.5% this year without the target being formally breached.

In 2019, official inflation closed the year at 4.31%.

The inflation target is set by the National Monetary Council (CMN). To achieve this, the Central Bank raises or lowers the economy’s basic interest rate (Selic), currently at 2% – a record low.

The market continues to expect to keep the basic interest rate at this level until the end of this year, rising to 3% by the end of 2021. In other words, the expectation is that the Selic rate will rise again next year.

For the IPCA 2021, the financial market lowered its forecast from 3.47% to 3.34%. Next year, the central inflation target is 3.75% and it will be officially met if the index fluctuates from 2.25% to 5.25%.

The IPCA is calculated from a typical consumption basket for families with incomes of one to 40 times the minimum wage, which covers ten metropolitan regions, in addition to the municipalities of Goiânia, Campo Grande, Rio Branco, São Luís, Aracaju and Brasilia.

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Construction cost increases 1.82% in November

The IBGE also announced on Tuesday that its National Civil Construction Index (Sinapi) rose 1.82% in November, accelerating compared to the rate registered in October (+ 1.71%).

The index is now up 8.06% in the year and 8.30% in 12 months.

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