Preliminary inflation figure falls to 0,6% in May, says IBGE.

By Nielmar de Oliveira - Reporter for Agência Brasil

Inflation as measured by the Broad National Consumer Price Index 15 (IPCA-15) closed the month of May with a sharp slowdown: it reached 0,6%. The data was released today (22) by the Brazilian Institute of Geography and Statistics (IBGE). In the previous month, the index reached 1,07% and, in April of last year, 0,58%.

The rate, which is a preview of the Broad National Consumer Price Index (IPCA) – the country's official inflation rate – the IPCA-15 aims to measure the inflation of a set of products and services sold at retail, related to the personal consumption of families whose income ranges from 1 to 40 minimum wages.

Despite the drop, with this result, the accumulated index for the year was 5,23%, above the rate of 3,51% recorded in the same period of 2014. In the accumulated total for the last 12 months, the index stood at 8,24%, close to that of the immediately preceding 12 months (8,22%), being, however, the highest result since January 2004 (8,46%).

According to IBGE (Brazilian Institute of Geography and Statistics), the slowdown in May was mainly influenced by the weight of electricity. With a weight of 3,88% in household expenses, electricity bills rose by only 1,41% in May, compared to 13,02% in April, a reduction of 9,14 percentage points. With the drop in electricity costs, the housing group index fell from 3,66% to 0,85% between the two preliminary readings.

Data from IBGE indicate that the health and personal care group (1,79%) had the highest increase in the month, with pharmaceutical products standing out, whose prices rose by an average of 3,71%. This item led the list of main impacts, accounting for 0,12 percentage points of the IPCA-15 in May.

The lowest result among the groups was transportation, with deflation (negative inflation) of 0,45%, driven by a 23,61% drop in airfares, impacting the IPCA-15 for the month by -0,1 percentage point – the lowest of the period. There was also a reduction in fuel prices (ethanol and gasoline), items that had been putting pressure on inflation.

In the food category, the increase was 1,05%, compared to 1,04% in the preliminary April figures, with significant increases in some of the important products in the population's basket: tomatoes (up 19,79%), onions (18,83%), carrots (10,45%), milk (2,64%), French bread (2,23%), soybean oil (2,17%), meats (1,40%), and chicken pieces (1,30%).

The IPCA-15 refers to the metropolitan regions of Rio de Janeiro, Porto Alegre, Belo Horizonte, Recife, São Paulo, Belém, Fortaleza, Salvador, and Curitiba, as well as Brasília and Goiânia, and its main distinguishing feature, besides its regional scope, is the data collection period, which runs from the middle of the previous month to the middle of the reference month.