Electricity and food costs put pressure on the price index for low-income families
Annual inflation approached 5% for the poorest population. According to a survey by the (Aplica Economic Research Institute), the accumulated rate in 12 months until October was 4.99% for Brazilians with high income “very low”. Here is the study (PDF – 532 kB).
The IPCA (Broad National Consumer Price Index) was valid until October. By income bracket, the rate varies from 4.44% to those of “high income” at 4.99% to those of “very low income”.
Ipea data show that inflation accumulated over 12 months is higher for the poorest
According to Ipea, all segments surveyed had an acceleration in inflation in October, with the exception of those that have “high income”. The reason is the different consumption basket of these families, which are less impacted, for example, by the increase in food prices compared to poorer people.
The richest benefited from the 11.5% reduction in air ticket prices and a 0.17% reduction in fuel prices.
“In the case of very low-income families, the inflation rate increased from 0.58% in September to 0.75% in October, reflecting, above all, the rise in food at home and electricity tariffs”said Ipea.
The population considered to have income “very low” are those with a household income of less than R$2,105.99 per month.
Brazil’s inflation target is 3%. The CMN (National Monetary Council) allows a tolerance margin of 1.5 percentage points up and down, or 1.5% to 3%. Financial agents indicate that inflation will be , according to the Focus Bulletin.
Ipea considers the “very low” income population to be those with a household income of less than R$2,105.99
Therefore, the (Central Bank) decided to increase the basic rate, the Selic, from 10.75% to 11.25% per year, which is the main instrument to control the rise in prices. The monetary authority wants to control the current price rise and analysts’ future expectations. The Central Bank said that there will be a gradual increase, but did not indicate what the terminal rate will be – the level that closes the end of the adjustment cycle.
Criticized by the president (PT) and allies, the president of the Central Bank, Roberto Campos Neto, as inflation is a “perverse tax that affects the poorest”, and that it is necessary to control the rate for the country to have social stability.
In 2025, the monetary authority will be composed, for the most part, of directors appointed by Lula. Currently, there are 4 directors appointed by the president. Everyone voted for the increase from 10.75% to 11.25% at the last meeting. The president of the PT (Workers’ Party), deputy (PR), that the BC’s note is “pure market terrorism.”
