Coffee prices fall for the first time in 18 months.
Data was released by IBGE.
Bruno de Freitas Moura - Reporter for Agência Brasil
When announcing the official inflation figures for July this Tuesday (12), which stood at 0,26%, The Brazilian Institute of Geography and Statistics (IBGE) revealed a perception that had not been recorded in the country for over a year: after 18 months, the price of ground coffee fell.
The Broad National Consumer Price Index (IPCA) showed that coffee prices fell 1,01%. In the previous 18 months, the product's price increase reached 99,46%, practically doubling.
With July's decline, coffee prices rose 41,46% year-to-date and 70,51% in 12 months. The annual inflation of ground coffee makes it the second-highest-influencing item in the IPCA (5,23%), accounting for 0,30 percentage points (pp). It is second only to meat, which accounted for 0,54 pp (a 23,34% increase).
price drop
According to IBGE research manager Fernando Gonçalves, the price drop last month is a result of the harvest and cannot be attributed to the tariff hike imposed by the United States on Brazilian products.
"These are figures from July," says Gonçalves. highlighting that the 50% tax on Brazilian products entering the United States, including coffee, only began on the 6th of this month..
"[In July], the harvest was already beginning, with a greater supply in the field. This could be the effect of this increased supply," suggests the analyst.
With the harvest, more coffee becomes available for supply, causing the pressure caused by consumer demand to fall and, consequently, prices to fall.
This effect, in fact, is also an expected reflection of the tariff hike, if coffee producers are unable to find other countries to buy the Brazilian product, since the tariffs will make coffee more expensive and make American buyers think twice before purchasing the item.
“With a greater supply of the product, the tendency is for prices to fall,” says Gonçalves.
Climate and China
According to the Brazilian Coffee Industry Association (Abic), The rise in coffee prices in the 18 months prior to July was explained by factors such as weather events.which damaged the grain harvest, and due to higher global demand, driven by the Chinese, who increased their consumption of the beverage.
