For the first time in more than two years, Brazil registered deflation, with a decline in the Extended Consumer Price Index (IPCA) for July, by 0.68%. In an interview with CNN This Saturday (13), the professor of Economics at the Federal Fluminense University (UFF) Julia Braga explained that low-income families are the ones who feel inflation the most.
“Inflation is felt more highly in low-income families, because a larger part of their budget is allocated to basic items, such as housing, food and electricity. So electricity gave a relief, but food still has very strong inflationary pressure,” he said.
According to the specialist, the reduction in the IPCA in July “is basically a result of the tax relief that occurred both on gasoline and electricity”.
The index provides a weighted average of several prices of items that represent a basket of consumer goods. Together, electricity and gasoline correspond to 10% of the total weight of the IPCA. “Any variation in the price of gasoline and electricity has a very high impact on this index”, explained Braga.
Regarding the coming months, the specialist said that the expectation is that the month of August will also bring deflation, but the subsequent months will register inflation again.
“The inflationary phenomenon that Brazil is experiencing, in particular, and that the world is experiencing in general, is a phenomenon related to costs. It’s not demand inflation,” she said.
Watch the full interview in the video above.
Source: CNN Brasil
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