Rising Inflation in Brazil

By Jeffrey T. Lewis

SÃO PAULO - Brazil's inflation rate over a 12-month period increased in mid-August due to a rise in electricity bills after the expiration of a temporary discount.

According to Brazil's Institute of Geography and Statistics (IBGE), consumer prices rose 0.28% from July 16 through Aug. 15, resulting in a 4.24% increase compared to the same period last year. Previously, consumer prices had fallen by 0.7% in the month leading up to mid-July, with a 3.19% increase over the preceding 12 months.

The prominent Itaipu power station on the Paraná river, shared by Brazil and Paraguay, recorded a profit in 2022. As a result, some of that money was returned to Brazilian energy users as a discount on their electric bills during July.

Among the nine categories measured by IBGE in its inflation report, the largest increase was observed in housing costs, rising by 1.08%. This comes after housing costs had declined by 0.94% in the month leading up to mid-July when the discount reduced electricity prices. However, residential power prices increased by 4.59% in the month through mid-August after the discount ended.

In contrast, food prices continued to decline in Brazil, falling by 0.65% in August after retreating by 0.40% in the previous period. Additionally, clothing prices decreased by 0.03% in August following a slight increase of 0.04% the month before.