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IPCA decelerates in June and marks first deflation in 11 years

Inflation

Since 2006, the country's official inflation did not register a negative variation

Amid the stabilization of the economy, the country recorded a fall in prices (deflation) for the first time in 11 years. In June, the Broad Consumer Price Index (IPCA), which measures official inflation, declined by  0.23 %. This is also the best result for the month since the creation of the Real Plan in 1994.

Given this performance, inflation accumulated in the last 12 months fell again, from 3.60% to 3.00%. In the first half, the IPCA stood at 1.18%, well below the 4.42% registered in the same period of last year.

The data were released on Friday (7) by the Brazilian Institute of Geography and Statistics (IBGE).

According to the agency, all the groups of products and services that weigh more in the domestic expenses registered fall. They are: housing (-0.77%), transportation (-0.52%) and food (-0.50%).

In the case of housing, the fall in electricity prices was the main responsible for the performance of the group. In the month, electricity tariffs dropped by 0.20 percentage points. In the transportation group, the main influence was the fall of 1.94% in interstate bus tickets.

In the Food and Beverage group, which accounts for 26% of household spending, the drop was driven by consumer food at home, which was 0.93% cheaper in June.

Goal reduction

The result comes a few days after the National Monetary Council (CMN) reduces the inflation target for the coming years. Currently at 4.5%, the inflation target will be 4.25% in 2019 and 4% in 2020, both with a 1.5 percentage point tolerance.

This year, experts expect the IPCA to end the year at 3.46%, compared to the previous estimate of 3.48%.

Source: Portal Brasil, with information from  IBGE