June 4, 2023

Campos Neto states that inflation is far from over; Understanding Why IPCA-15 Numbers Are Deceiving – Money Times

A preview of inflation rose 0.51% in May, slowing compared to the 0.57% rise recorded in April. The index accumulated in 12 months increased by 4.07%. (Photo: Reuters/Adriano Machado)

president central bankAnd Roberto Campos Netoto say that the process of deflation will take some time.

“We need to proceed with patience and serenity, and we believe that the de-inflation process is not over yet, and we need to make sure that we make inflation converge on the target,” he said in recorded comments for the 2023 Global Emerging Markets Summit. promoted Moody’s.

Warning notwithstanding, Campos Neto has to contend with numbers that show a different scenario – at least for now.

National Consumer Price Index 15 (IPCA-15), which measures the former economic inflation, rose 0.51% in May, slowing relative to the 0.57% rise recorded in April. The result was below the average market expectation, 0.61%.

According to data released by the Brazilian Institute of Geography and Statistics (IBGE), IPCA-15 accumulates 3.12% in the first five months of the year. Thus, the index has accumulated in 12 months at +4.07%, from +4.16% in the previous month. The result was also below the expected average +4.07%.

Inflation is still within cap central bank for 2023, 4.75% for the second month in a row.

hidden inflation

Marco Caruso, Chief Economist original bankhighlighting that the formation of inflation came out qualitatively better.

On the other hand, dispersion, which measures the percentage of IPCA-15 items with positive variance, increased from 63.2% to 64.3%. On the other hand, both pressure on prices services As for the average cores, which served as the central bank’s magnifying glass, they fell in the month,” he says.

However, remember that the behavior of services and kernels still requires caution.

And there’s more: In the last minutes, the central bank indicated that, for the second quarter, a related decline in the accumulated twelve-month inflation due to the base effect of the previous year is indeed expected.

In May and June 2022, the monthly IPCA was less than 1% and that will affect the backlog for the coming months. Between July and September, the country recorded a downturn.

On the other hand, the second trimester should be characterized by price increases.

“In the second half, since the effects of tax measures that lowered the price level in the third quarter of 2022 are no longer included in the accumulated inflation, and the effects of this year’s tax measures will continue to be included, and an increase in the same indicator will be observed,” the text indicates.

In addition, the central bank’s inflation expectations remain inconsistent with the targets set by the National Monetary Board (CMN).

* With Reuters