Last months were marked by consistent deceleration of price hikes
10/01/2023
Inflation has surprised once again to the upside at the end of 2022, raising the full result for the year. The benchmark inflation index IPCA rose by 0.62% in December, above the 0.61% ceiling of the projections gathered by Valor Data — the median was 0.45%. Thus, last year closed with an inflation of 5.8%, against a market expectation of 5.6%.
According to economists’ evaluation, inflation is still high, although it represents a significant slowdown considering the 10.1% reported in 2021 and the peak of 12.13% reached in the 12 months until April. Despite that, for the second year in a row, the Central Bank will need to write a letter to the finance minister justifying why the IPCA missed the target, which was 3.5% in 2022, with a tolerance of up to 5%.
The last months of last year saw a deceleration in 12 months, but the IPCA remained at double-digit levels between September 2021 (10.25%) and July 2022 (10.07%). The projection for last year’s inflation was much higher than what was actually observed, had it not been for the government’s intervention at the time. Amid the electoral race, then-President Jair Bolsonaro cut taxes on important items.
Considering deflations in fuel (-23.9%, after a 49.02% high in 2021), electricity (-19.01%), and internet services (-12.09%), this “hand of the government” reduced inflation by 2.16 percentage points, said Luis Otávio de Souza Leal, chief economist at Banco Alfa.
Gasoline alone fell 25.78% in 2022, after a high of 47.49% in 2021, exerting the greatest individual impact (-1.7 percentage points) on holding down the IPCA for 2022. Besides the effect of the lower ICMS, there was also the influence of falling fuel prices at refineries, set by Petrobras throughout the year.
“Excluding the gasoline and electricity sub-items from the inflation calculation, the IPCA would have been 9.56%,” said André Filipe Guedes, an analyst at the statistics agency IBGE.
Administered prices (those regulated by contract or public agency) saw a deflation of 3.83% in 2022 after rising almost 17% in 2021, according to MCM Consultores. Free prices, on the other hand, had accelerated to 9.39% from 7.7%.
Among the main influences for the IPCA’s rise are items related to automobiles — be it taxes, services, or the vehicle itself. The automotive industry was one of those that most felt the effects of the disorganization of the production chain brought about by the pandemic, with more expensive inputs and a lack of raw materials. As the prices of taxes and services follow the variation in car prices, they are also affected.
The behavior of industrial goods, however, ended up affecting the average of the measures that try to soften the effect of more volatile items and are closely monitored by the Central Bank, which went to 0.66% in December from 0.33% in November.
*By Anaïs Fernandes, Lucianne Carneiro — São Paulo, Rio de Janeiro
Source: Valor International