Food prices, such as meat and milk, should decline in the coming months, says FGV

In the coming months, consumers should feel relief in their pockets when shopping at the supermarket. According to the economist at Fundação Getúlio Vargas, André Braz, the forecast is for deflation in foods such as beef, milk and chicken.

The fall in the values ​​of basic items in the basket of Brazilians was already felt in the Broad Producer Price Index (IPA) for October, released on Monday (08) by the Brazilian Institute of Economics (IBRE/FGV). Of the top five items falling in inflation, all were food, including beef (-7.71%), corn in grain (-4.45%), soybeans (-0.38), beans (-4.79% ) and processed milk (-4.01%). According to Braz, the return of the rains influenced the decline.”

“The fall in the prices of these foods to producers anticipates the possible deflation in retail, to final consumers. The return of the rains makes agriculture have more optimistic forecasts for the future of crops, in addition to helping to recover pastures, used to feed cattle. With this, the rancher is able to fatten the cattle only by letting them loose, with a reduced cost of feed. This scenario improves the supply of meat and milk”, he explains.

Also according to the economist, another factor is the embargo on beef exports. For almost two months, China vetoed the purchase of Brazilian beef, after confirming cases of “mad cow” disease.

“The arm wrestling was in the volume of exports. But that fell apart, China has already authorized the purchase, because the real is devaluing a lot against the dollar, so it is an opportunity to buy cheap”, he says.

Despite the deflation, Braz points out that consumers cannot celebrate so much. This is because the items suffered several consecutive highs.

“At the moment, any drop in price is welcome to all consumers, especially important items. But, after so many hikes, this decline may not stand out as much”, says the economist.

On the other hand, fuel must be the highlight of inflation. Unlike food, fuel should be the highlight of inflation in November. The General Price Index – Internal Availability (IGP-DI), also released by the Brazilian Institute of Economics (IBRE-FGV) points to an increase of 10.24% in diesel oil and 2.73% in gasoline in October.