Brazil’s inflation slows slightly in August

Brazil’s annual inflation rate saw a modest decline in early August, providing limited relief to the central bank, which is under sustained pressure to hike interest rates.

Extended National Consumer Price Index 15 (IPCA-15) rose 4.35 per cent in the first two weeks of August compared to the same period last year.

On the month, inflation rate stood at 0.19 per cent. In August 2023, the rate was 0.28 per cent.

While this represents a slight slowdown from the previous month, it’s still higher than policymakers would like. The central bank has been under pressure to raise interest rates to combat inflation, but the strong economy and rising consumer spending have made this task challenging.

Transportation costs were the primary driver of inflation in August, increasing by 0.83 per cent due to a nationwide hike in gasoline prices. Education costs also contributed to the overall price rise. However, consumers did benefit from a decline in food and beverage prices.

Despite the recent slowdown, inflation remains a significant concern for Brazil. The central bank will continue to monitor the situation closely and may take further steps to address inflationary pressures.

Attribution: The Brazilian Institute of Geography and Statistics (IBGE)