Inflation: Northeast has the highest inflation since 2020, says FGV – 09/05/2023 – Market

The Northeast recorded higher inflation than the average of other regions in Brazil from January 2020 to March 2023.

The conclusion is from a survey released this Tuesday (9) by FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation).

The analysis was based on a new price index from the institute, the IPC-Regional (Regional Consumer Price Index).

This indicator estimates inflation for low-income families (up to 1.5 minimum wages per month) and high-income families (above 11.5 minimum wages per month) in different regions of the country.

In this publication, the focus is on the Northeast, due to the fact that the region “has experienced an inflationary process that is a little more rigorous than the others”, according to FGV Ibre.

From January 2020 to March 2023, the CPI for low-income families accumulated a 26.46% increase in the Northeast. Meanwhile, the advance in the other regions of the country, excluding the Northeast, was 23.51%.

The Northeastern result is partly associated with the high cost of food, which accounts for a larger share of the budget of the poorest families.

In the Northeast, accumulated inflation for low-income food was 43.24% from January 2020 to March 2023 – in the other regions, the group had an increase of 42.01%.

To illustrate the pressure of food prices, FGV Ibre cited ten foods that rose well above average local inflation: soy oil (119.02%), rice (80.41%), popcorn corn (76.46% ), cassava flour (74.45%), granulated sugar (59.71%), margarine (59.43%), sausage (58.49%), eggs (56.48%), powdered milk (54 .05%) and French bread (46.37%).

Among families considered high-income, the accumulated inflation by the IPC-Regional was 23.04% in the Northeast from January 2020 to March 2023. In the average of the other Brazilian regions, the advance reached 21.42%.

For the richest layer of the population, the group with the greatest weight in the family budget is transport. In the Northeast, the accumulated inflation for transport for these consumers was 24.66% from January 2020 to March 2023. In the other regions, the increase was 23.12%.

FGV Ibre states that, from 2020 to March 2023, inflation was influenced by several factors. The initial pressure, says the institute, came from the consequences of the Covid-19 pandemic. The health crisis has disrupted global production chains, creating a shortage of raw materials.

Then there was the impact of the water crisis and the increase in oil prices in 2021, points out FGV Ibre. Starting in 2022, the Ukraine War put additional pressure on agricultural commodity prices, including wheat and corn, which put pressure on food.

The survey by FGV Ibre also brings a cut of the IPC-Regional in the accumulated 12 months. Until March 2023, the highest increase in inflation of low-income families was registered in the North (4.70%). Northeast (4.57%), South (3.12%), Southeast (3.03%) and Midwest (2.24%) appear in sequence.

Among high-income families, the Northeast had the biggest increase in the IPC-Regional (4.70%) in the 12 months up to March 2023. The South (4.41%) appeared later, followed by the North (4.14% ), Southeast (4.05%) and Midwest (3.23%).

“Inflation perceived by families, in the most diverse regions of the country, follows a very particular dynamic. Families with the same income level, but residing in different regions, can perceive differences in the behavior of inflation”, says FGV Ibre.

“Such differences are based on consumption habits, taxes, shipping, weather and several other factors. In addition, families in different social classes also tend to feel a difference in the behavior of inflation”, he adds.