Price drop in the countryside already reaches inflation – 04/05/2023 – Vaivém

The drop in food prices in the countryside reaches inflation and the consumer’s table. Some products, however, such as milk, continue to pressure the food index.

In the first quarter of this year, Cepea’s IPPA (Product Group Price Index), an index that reflects the evolution of prices in the field, showed a decrease of 8%, compared to the same period of 2022. also in the international market, according to the FAO, which reports a retraction of 11%.

Favorable weather and greater area and productivity are generating a record grain harvest this year in the country. In addition, demand has not yet recovered, which also helps in the retraction of prices.

Soybeans, with a record production close to 155 million tons in this harvest, have the lowest monthly prices since 2020. The oilseed’s retreat in the field brought price retractions in soybean oil for the consumer.

The Fipe (Fundação Instituto de Pesquisas Econômicas) inflation index for April indicates a retraction of 9.7% in the accumulated result for the year in this product. The retreat, however, is still small, since soybean oil prices accumulated a 164% increase for São Paulo consumers from 2019 to 2022.

Corn, which also has the lowest price level since 2020 in the field, is yet another relief factor for inflation. Corn flour and cornmeal, which have doubled in value over the past four years, have fallen by 6.5% and 4%, respectively, this year.

The fall in corn prices also reduced costs in the protein sector, allowing a retraction in meat prices. After an increase of 78% from 2019 to 2022, chicken has an accumulated drop of 9% this year. Pork, although at a slower pace, is also falling at retail, losing 2% of its value in the year.

Beef, which had successive increases in recent years, is falling. In Fipe’s calculations, the average deceleration in prices is 4% from January to April. Greater offer of cattle in the internal market and loss of value in the external market allow the fall.

The retraction of wheat in the field allows a readjustment of bread prices for the consumer. With the invasion of Ukraine by Russia, French bread had risen 19% last year. In April, prices stopped rising in supermarkets and the accumulated result for the year is 1.56%, according to data released by Fipe this Thursday (4).

Price pressure for breakfast is also lower because of coffee. After the acceleration of prices in 2021 and 2022, due to frost on crops, coffee powder accumulates a 4% drop in 2023 for the consumer, according to Fipe.

Even with the drop in prices of various agricultural products, the pace of increases in milk, beans and tomatoes causes an acceleration in the rate of food inflation. In April, food rose by 0.86%, up from 0.59% in March. These three items alone were responsible for 38% of the average change in inflation of 0.43% last month.

One of the main pressures of inflation this year comes from milk. Last month, the high type of long-life milk was 7% in São Paulo, accumulating 14% in the year. Smaller uptake since last year, due to the weather, and a fiercer dispute of industries for the product raised prices.

The consumer will continue to pay more for milk, since the offer will remain limited with the arrival of the off-season. Weak demand for the product and increased imports, however, should reduce the pressure. In the first quarter, Brazil imported 523 million liters of milk equivalent, three times more than in the same period last year, according to Cepea.

The cost of food is one of the main components of weight in inflation. According to data from Fipe, of every R$100 spent by consumers, R$24.5 are spent on food. The biggest weight comes from housing, which reaches R$ 31.1. In April, food was responsible for 49% of the month’s inflation rate.

PRESENT LINK: Did you like this text? Subscriber can release five free hits of any link per day. Just click the blue F below.