Inflation: IPCA should slow down after Petrobras cuts – 05/16/2023 – Market

After rising 0.61% in April, inflation measured by the IPCA (Broad National Consumer Price Index) should slow down to close to 0.25% in May and 0.15% in June, projects economist André Braz, from FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation).

According to Braz, the expected loss of strength for the IPCA is partly associated with the possible effects of the reduction in fuel prices announced by Petrobras this Tuesday (16).

The state-owned company informed that, as of this Wednesday (17), gasoline will have a reduction of R$ 0.40 per liter in refineries (-12.6%). Meanwhile, diesel oil will be reduced by BRL 0.44 per liter (-12.7%), and the 13-kilogram gas cylinder (LPG) will drop by BRL 8.97 (-21.4%).

“It will be a great contribution to hold inflation in these two months [maio e junho]. Now, in July, we cannot forget that there is a new increase in gasoline due to the leveling of the ICMS [imposto estadual]. The ICMS will be readjusted in the states, it will go up”, ponders Braz.

“This does not change much the inflation expectation for the end of the year. It is a zero-sum game. It falls now and rises again in July”, he adds.

The economist continues with the IPCA projection close to 6.2% in the accumulated 12 months until December 2023. Until April, the index marked 4.18% in this cut, according to the most recent data released by the IBGE (Brazilian Institute of Geography and Statistics).

The drop in cooking gas, which accounts for 1.3% of the family budget, could reach consumers in the form of a 15% reduction, estimates Braz.

“This means that the IPCA for the next 30 days will be impacted by about 0.17 percentage points. Half of that would be in May and half in June. So, this impact will not be fully felt this month.”

In the case of gasoline, which accounts for approximately 5% of the family budget, the drop for the consumer could reach 8%, according to Braz. This would generate a downward impact of 0.40 percentage points on the IPCA: 0.20 in May and 0.20 in June.

Diesel, in turn, has a small weight in the family budget, 0.3%, says the economist. Fuel, however, influences the prices of freight, public transport and machinery in the countryside. That is, it usually causes indirect impacts for the consumer.

“Its effect is more widespread, but it can be as important as that of gasoline. Who knows, by reducing the costs of transporting agricultural production, we can see a more widespread effect”, he says.

“If we combine the contribution of GLP [0,08 ponto percentual em maio e 0,08 em junho] with gasoline [de 0,20 ponto percentual em cada mês]we have more or less 0.30 percentage points of deceleration in inflation in May and 0.30 in June”, completes Braz.

On the median, financial market analysts project IPCA of 6.03% in the accumulated 12 months until December, according to the most recent edition of the Focus bulletin, released on Monday (15) by the BC (Central Bank).

Before announcing cuts in the prices of gasoline, diesel and cooking gas, Petrobras confirmed this Tuesday the replacement of the PPI (import parity price) policy, which defined fuel readjustments based on simulations on the cost of imports. of the products.

The state-owned company’s new model no longer considers the cost of imports and focuses on the search for customers and the opportunity cost of selling products. There is expectation that the measure will contribute to reduce prices in the country.