Brazil registers a general price drop in August, driven by cheaper food

Brasil de Fato

Brazil saw a widespread drop in prices in August, driven by cheaper food and housing items. According to the Brazilian Institute of Geography and Statistics (IBGE, in Portuguese), prices fell by 0.02%, contrary to economists’ expectations of a 0.02% rise. 

The IPCA is Brazil’s official price index and over the last 12 months, it has risen by 4.24%, with August marking the first negative month since June 2023. As a result, it remains within the government’s 2024 target of up to a 4.5% increase. 

The IBGE says that the price of food and beverages fell by 0.44% last month. Food alone contributed to a 0.09% drop in the overall IPCA, indicating that inflation would have been even lower if not for price increases in other product categories. 

Food prices at home dropped even more: 0.73%. This was due to significant decreases in the prices of potatoes (-19.04%), tomatoes (-16.89%), and onions (-16.85%). On the other hand, prices for papaya (17.58%), bananas (11.37%), and ground coffee (3.70%) rose. 

Housing items were 0.51% cheaper, influenced by a 2.77% drop in electricity bills in August. 

All other segments of products and services that comprise the IPCA saw price increases, though none exceeded 0.75%. 

The transportation sector saw no overall change, with a 0.61% rise in fuel prices offset by a 4.93% drop in airline ticket prices. 

In July, the IPCA had risen by 0.38%, bringing the 12-month accumulated index to the upper limit of the 2024 target: 4.50%.