Ipea: drop in inflation was felt most by the poorest population

In August, the drop in inflation was felt most by poorer families. While the official index was negative at 0.11% , the cost of living for families earning up to R$3,300 fell by more than 0.20%. Meanwhile, for households with monthly incomes above R$22,000, inflation was positive at 0.10%.

The finding is in the monthly Inflation by Income Range bulletin from the Institute of Applied Economic Research (Ipea), an agency linked to the Ministry of Planning and Budget.

The study compares official inflation , calculated by the Broad National Consumer Price Index (IPCA), from the Brazilian Institute of Geography and Statistics (IBGE), with the cost of living for different income brackets.

Of the six monthly family income brackets, the three lowest had the most pronounced perception of deflation (average drop in prices):

• very low income: -0.29%
• low income: -0.21%
• lower-middle income: -0.19%
• average income: -0.07%
• IPCA: -0.11%
• upper-middle income: 0%
• high income: 0.10%

The survey divides families into the following monthly income ranges:

• very low: less than 2,202.02 reais
• low: between 2,202.02 and 3,303.03 reais
• medium-low: between 3,303.03 and 5,505.06 reais
• average: between 5,505.06 and 11,010.11 reais
• medium-high: between 11,010.11 and 22,020.22 reais
• high: above 22,020.22 reais

The IPCA (Brazilian Consumer Price Index) measures the cost of living for families earning between one and 40 minimum wages. The current minimum wage is R$1,518.

Food and electricity bill

According to the study's author, Maria Andreia Parente Lameiras, poorer families saw greater relief in their pockets in August due to their consumption profile, with a greater weight on items such as food and housing.

"In addition to the intensification of the deflation trajectory of food at home, the drop in electricity rates, benefiting from the incorporation of the Itaipu Bonus, canceling out the pressure from the adoption of the red flag level 2, explains this sharper drop in inflation in the lower-income segments, given the weight of these items in these families' budgets," he explains.

The so-called Itaipu Bonus is a discount on electricity bills that benefited 80.8 million consumers. As reported by Agência Brasil , the bonus offset the red tariff flag 2 , which adds R$7.87 to electricity bills for every 100 kWh consumed.

The Ipea study points out that, in the case of food at home, the drops in cereals (-2.5%), tubers (-8.1%), coffee (-2.2%) and animal proteins: meat (-0.43%), poultry and eggs (-0.8%) and milk (-1%) stand out in August.

For higher income groups, Lameiras indicates, the deflation of food and energy “was partially offset by the rise in prices of services, notably eating out and recreation.”

Accumulated

In the 12-month period, the perception of inflation is the opposite of that recorded in August, with poorer families having a greater burden on their pockets.

• very low income: 5.23%
• low income: 5.33%
• lower-middle income: 5.19%
• average income: 5.08%
• upper-middle income: 5.07%
• high income: 5%

The 12-month accumulated IPCA reached 5.13%, above the government's target of 3% per year, with a tolerance of 1.5 percentage points (pp) more or less, that is, reaching a maximum of 4.5%.

“In the last twelve months, the main inflationary pressures came from the food and beverage, housing, transportation, and health and personal care groups,” the study points out.