IPCA increased by 0.71% in March; points IBGE

Benito Salomão, master and doctoral student in economics, warns that the result was high, especially for a specific month. “This in the context of the Brazilian economy, where you have high accumulated inflation, around 6% per year. In twelve months, it is high inflation”, he points out.

Of the nine groups of products and services surveyed, eight were discharged in March. The exception was Household items (-0.27%), which had risen by 0.11% in February.

The main highlight of the index came from Transport, which had the greatest impact (0.43 pp) and variation (2.11%). The rise was driven by gasoline, which rose 8.33% and had an individual impact of 0.39 pp

At the end of February, the federal government had announced the increase in fuel prices for March 1st. Thus, gasoline now has an incidence of R$ 0.47 per liter.

According to the IGBE, the calculation of the IPCA has been carried out since 1980 and covers ten metropolitan regions in the country and the municipalities of Goiânia (GO), Campo Grande (MS), Rio Branco (AC), São Luís (MA), Aracaju (SE) and Brasilia (DF). Monthly, the index analyzes families with monthly income from one to 40 minimum wages, whatever the source.

Impacts for the population

The federal government uses the IPCA as Brazil’s official inflation index. When the salary variation, from one year to the next, is lower than the index, the Brazilian consumer loses purchasing power, since prices rise more than income.

According to Salomão, the increase of 0.71% in March mainly affects the less favored sections of the population. “Without a doubt, it means a higher cost of living, which hurts low-income consumers more acutely and makes life more expensive,” he warns.

For the professor of Economics at Ibmec in Brasília, William Baghdassarian, high inflation means that with the same salary, people buy fewer goods. But with low or negative inflation, people buy more goods. “So, the ideal thing is for the federal government, through the Central Bank, to establish policies in order to keep inflation within a certain level that does not harm the population so much”, he says.

Despite the increase, Salomão informs that the outlook for the coming months is one of greater optimism, as the Brazilian fiscal situation is on the way to being resolved. “The Central Bank will be able, without a doubt, to reduce the interest rate that harms inflation and the cost of living”, he explains.