IPCA is below expectations, but once again exceeds the BC target

Inflation measured by IPCA rose 0.26% in September, IBGE reported this Wednesday (11). Although it accelerated for the third consecutive time (in July inflation rose 0.12% and in August, 0.23%), the index was below financial market expectations.

The median projections collected by the Broadcast and Valor Data services were 0.33% and 0.32%, respectively.

With the September index, the IPCA accumulated in 12 months reached 5.19%, once again exceeding the ceiling of the target pursued by the Central Bank. The BC seeks an index of 3.25%, with a tolerance of up to 4.75%. Inflation over 12 months has been below this maximum limit since March.

Exceeding the ceiling was also expected by the market. The most recent forecasts collected by the BC’s Focus bulletin indicate that banks and consultancies expect a slowdown in the coming months, causing the IPCA to close the year just below 4.9%.

Gasoline was the item that had the greatest impact on inflation in September

The main source of pressure on inflation in September was gasoline, which became 2.8% more expensive, still reflecting the adjustment promoted by Petrobras in August. Alone, fuel accounted for 0.14 percentage points of the IPCA in the month. Diesel, which has a smaller weight in the index, rose even more (10.1%).

“The movement indicates that fuels are currently one of the main sources of inflation in the country, something that becomes worrying when taking into account the challenging international situation”, says economist Matheus Pizzani, from brokerage CM Capital.

According to him, the IPCA numbers support a scenario of maintaining cuts of 0.5 points in the basic interest rate (Selic) at each meeting of the BC’s Monetary Policy Committee (Copom). Pizzani predicts that the pace of rate decline will remain this way until the first half of 2024, given the slow disinflation environment and the adverse external scenario.

Economist Alexandre Maluf, from XP Investimentos, sees the September IPCA data as “a very benign composition”. It highlights the continued disinflation of so-called “underlying services”, whose prices are less volatile.

“There was a fairly widespread decompression of current inflation. It’s encouraging to see these data, although we think they don’t break that high bar that the Central Bank has been saying, that we would need to have a very big surprise in the IPCA to accelerate the rate of interest cuts “, says the analyst.

The Bradesco bank report also draws attention to the lower inflationary pressure of underlying services, such as eating out.

For the bank, the IPCA result was “qualitatively better than expected”. “Our projection of 4.8% [para a inflação ao fim do ano] has a downward bias. For 2024, our expectation remains at 3.6%”, says the text.