If the dollar remains at the current level, the drop in commodity prices such as ore, cattle and cattle meat, shown at the IGP-M (general market price index), may support lower official inflation growth in the coming months.
The assessment is from Economist André Braz, coordinator of the price rates of FGV/IBI, who recalled that the meats have already shown 0.77% in IPCA-15 (broad consumer price index), which is the previous inflation index and was released yesterday by IBGE.
This month’s IGP-M, which was released by FGV/IBRE this Friday, showed a 3.99% decline in cattle prices and 5.50% in cattle meats. Iron ore fell 3.64% in the period, and rice in shell fell by 9.11%. The overall index retreated 0.34%.
Read more: IGP-M has 0.34% deflation in March, a much more intense retreat than expected
“The fall of cattle and cattle meat in the IGP-M shows potential for this fall in beef to be sustained longer in the gondolas of the supermarket,” said Braz. He recalls that the meats have a relevant weight within the IPCA, and that the prices of this item has influenced other proteins, such as the egg.
“The egg is a highlight in inflation, because the meat has been very expensive and people migrate from one protein to another, from face to cockroach. Of course it does not explain the entire increase in the egg, but it is a part of the explanation,” says Braz.
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IGP-M rises 8.58% in 12 months
Despite the good news brought by the IGP-M of March, Braz recalled that the 12-month indicator is rising 8.58%, a sharp acceleration.
Read more: IPCA preview rises less than expected, but inflation will still be above the goal
From now on, the expert states that everything will depend on whether the devaluation of the real will sustain itself over time, and if this will allow new revisions down the Large Producer Price Index (IGP-M). In March, the IPA was pulled down by meat and ore and retreated 0.73%.
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“Let’s see if a more stable exchange rate from now on, around R $ 5.70, it remains and makes room for this slowdown in inflation to materialize in other important IPA segments, applying the IPCA items list that can also have this effect in the short term.”
