The inflation preview for the month of November calculated by the IPCA-15 (Extended National Consumer Price Index 15) was 0.62% according to IBGE data released this Tuesday (26). The indicator is higher than expected by the financial market – 0.50% – and was driven up mainly by the prices of food and personal expenses.
According to the institute, food and beverages accounted for 1.34% in the index, due to increases in soybean oil (8.38%), tomatoes (8.15%) and meat (7.54%). In total, food at home increased from 0.95% in October to 1.65% in November.
Personal expenses were impacted due to the increase in the specific rate of Tax on Industrialized Products (IPI) on the price of cigarettes, which rose 4.97%.
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On the other hand, the residential electricity bill fell from 5.29% in October to 0.13% in November, with the tariff flag changing from red to yellow. This helped to slightly reduce the costs of Housing expenses from 1.72% to 0.22%.
Of the nine groups analyzed by IBGE, only education expenses had a slight drop in the month, of 0.01%.
In the year’s overview, the IPCA-15 accumulates an increase of 4.35%, while, in the last 12 months, it totals 4.77% – the inflation target ceiling is 4.5%. This, points out economist Matheus Pizzani, from CM Capital, worries the financial market for next year.
“The increases observed in the food group and in certain components of the administered prices group should give rise to inflation over the next year, with adverse effects on the level of aggregate demand, which tend to be catalyzed by the maintenance of a effectively restrictive monetary policy”, he said.
Index may influence new Selic increase
The economist sees that “it is necessary to recognize” that the current inflation trajectory in the country must “continue to demand firm action from the Central Bank” – that is, an increase in the basic interest rate, which is at 11.25% with no expectation of fall.
This will mean that the current director of Monetary Policy and future president of the municipality, Gabriel Galípolo, will take office next year, already having to justify why he did not meet the inflation target. The financial market’s expectation is that it will end the year at 4.63% according to this Monday’s Focus Report (25).
“There is also the bottleneck represented by medium-term inflation expectations, a component of great relevance to the BCB’s projections. [Banco Central] and which should continue to decline in the midst of the most adverse macroeconomic environment currently faced, reinforcing the need for the current upward cycle to continue, deflating the possibility of an early end-of-cycle scenario and pushing the discussion to the field of the magnitude of the next adjustments” , added Matheus Pizzani.
Felipe Vasconcellos, partner at Equus Capital, goes further and predicts a strong advance of “0.75% in Selic at the next Copom meeting [nos dias 10 e 11 de dezembro]taking the interest rate to 12% by the end of the year, up from the 11.75% forecast just a few weeks ago.”
