Milk, potato and tomato rise more than 10% in April; see why everything is so expensive

The food group pulled up the composition of the Broad Consumer Price Index (IPCA) for April, according to data released on Wednesday (11) by the Brazilian Institute of Geography and Statistics (IBGE).

The Index decelerated to 1.06% in April, the highest level for the month since 1996 (1.26%). Among the nine groups of products and services that comprise it, the biggest change (2.06%) and the biggest impact (0.43 pp) came from the Food and Beverages group.

Potatoes, milk, soy oil and wheat flour are among those that rose the most.

Check out some of the foods that rose the most in April:

• English potato (18.28%);
• Strawberry (17.66%);
• Passion fruit (15.99%);
• Cauliflower (13.25%);
• Long-life milk (10.31%);
• Tomato (10.18%);
• Zucchini (9.31%);
• Soybean oil (8.24%);
• Wheat flour (7.34%);
• Carioca beans (7.10%);
• Meat (1.02%).

Despite having presented small increases or decreases in April, some products stand out for the expressive increases in the accumulated of 12 months. Carrots, for example, dropped 4.61% in the month; but, in the year, it has already accumulated a high of 178%.

Check out foods that rose the most in the 12-month period:

• Carrots (178.02%);
• Tomato (103.26%);
• Zucchini (102.99%);
• Melon (82.46%);
• Strawberry (70.39%);
• Meat (8.06%).

What explains these highs?

According to Matheus Peçanha, a researcher at the Getúlio Vargas Foundation (FGV), climate problems were the main contributors to this scenario.

“We have witnessed a number of climate problems since 2020,” said Peçanha in an interview with CNN .

First, the La Niña effect lasted throughout the year, culminating in significant inflation in food and energy prices.

Soon after, a series of other weather problems appeared. The frosts impacted the production of coffee, sugar and pastures — especially harming livestock.

Subsequently, heavy rains also affected pastures (consequently interfering with meat and milk production) and, specifically, vegetables.

The specialist also adds that, surrounding these problems, other events ended up potentiating the increases: “high diesel prices increase the cost of freight; the war in Ukraine raises the cost of fertilizers and wheat; the higher exchange rate also ends up increasing exports which, added to the high external demand for meat from China, end up reducing internal supply and raising prices”, he explains.

“Overall, costs are experiencing excessive shocks.”

dairy

Dairy as a whole – especially long-life milk – tops the list of foods with the highest gains.

According to the Center for Advanced Studies in Applied Economics (Cepea) of the University of São Paulo (USP), the increase in the price of milk to the producer is a consequence of the decrease in production in the field, which, in turn, is linked to the increase in production costs and the off-season.

“The lower availability of pastures, due to the season of the year, raises the costs of feeding the herd, which causes the seasonal increase in milk prices in the field. However, this year, the increase in production inputs has eroded the dairy farmer’s margins, limiting investments in the activity and reducing the potential for supply”, says the institute in a note.

According to Rodolfo Margato, economist at XP, this increase has a strong influence on the meat market.

“Carcass prices and meat futures prices are at all-time highs. We have seen producers increasing the slaughter of females – that is, increasing the slaughter of dairy cattle – in view of this increase. This also reduces the milk supply, pushing prices up, explains Margato to CNN .

Peçanha adds that the increase in the price of grains, added to the excess rain, generated a disinvestment in the dairy cattle sector. Producers are withdrawing from this less profitable market, which could be a negative in the long run.

According to him, even if prices improve, until these producers return to this market, consumers will continue to feel the consequences in their pockets.

Improvement?

With no forecast of a decrease in fuel prices, at the end of international geopolitical tensions and in the midst of a scenario of high inflation, food prices should continue to weigh heavily on consumers.

Matheus states that, in the very short term, there should not be such a rapid improvement. “Now, for example, we were supposed to be finishing most of the crops, but they are mostly damaged. Until the next harvest starts, in the spring, we should have this pressure.”

“The forecast to normalize these rains is in winter, as it is a time of lower precipitation. We can only hope that this forecast of rains is correct”, he concludes.

* Under supervision of Ana Carolina Nunes