Brazil’s inflation measured by IPCA-15 index, which gauges inflation from mid-June to mid-July reached 0.54 percent month-on-month, as compared to 0.35 percent month-on-month in the June’s entire month and 0.4 percent month-on-month between mid-May and mid-June.
Nearly 70 percent of the price variation in July’s IPCA-15 was because of rise in food prices, which was due to supply problems, noted BBVA Research in a research report.
Food inflation accelerated 1.45 percent on sequential basis, as compared with 0.71 percent in June. On a bright side, non-food prices continued to ease in the first weeks of July, consistent with reductions in regulated prices and the slowdown in demand.
On a year-on-year basis, consumer prices rose 8.93 percent in mid-July, as compared with 8.98 percent in the 12 months to mid-June. This was above market projections of 8.84 percent. This supports projections that the Central Bank of Brazil will wait for a longer time before lowering rates.
“Taking IPCA-15’s figures for July into account, we expect the IPCA for the full-month of July to reach 0.40 percent MoM in monthly terms and to ease somewhat in July, to 8.6 percent YoY from 8.8 percent YoY in June,” added BBVA Research.


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