Brazil's Inflation Rate Rises to 0.46% in May

Financials Author: EqualOcean News Jun 12, 2024 06:34 PM (GMT+8)

On June 11, the Brazilian Institute of Geography and Statistics (IBGE) reported that Brazil's inflation rate increased to 0.46% in May, primarily driven by rising food prices.


The cumulative inflation rate for January to May this year is 2.27%, and the cumulative rate for the past 12 months is 3.93%, still within the Brazilian government's target of 3% (with an upper limit of 4.5%). In April, the inflation rate was 0.38%. Since October 2023, the inflation rate had been steadily decreasing until this rise in May.

The report highlights that food prices were the main factor driving the inflation increase, with food prices rising by 6.33% this month. Notably, potato prices surged by 20.61%. Analysts attribute the rise in inflation mainly to the severe rainstorms in southern Brazil since April 29. The affected region, Rio Grande do Sul, is a major producer of wheat, soybeans, and other grains. The impact of the storms on food and gasoline prices is already evident, and the specific effects over the coming months remain to be seen.

In response to the disaster, the Brazilian federal government recently announced a relief package worth 50.9 billion reais (approximately USD 9.9 billion) to support the residents, businesses, and local governments in Rio Grande do Sul. Preliminary estimates indicate that post-disaster reconstruction will require at least 19 billion reais (approximately USD 3.68 billion).

Brazilian meteorologist Carlos Nobre noted that from 2023 to the first four months of 2024, rainfall in southern Brazil doubled, while northern regions experienced a sharp decrease in rainfall. In less than a year, Brazil has faced four floods, with Rio Grande do Sul experiencing two floods last September and November.

World Meteorological Organization spokesperson Clare Nullis stated at a press conference that the disasters in Rio Grande do Sul are the result of a "double whammy" of El Niño and climate change. Even without the El Niño phenomenon, the long-term impacts of climate change will continue to affect Brazil. With each degree of temperature rise, both local and global weather patterns are expected to become more extreme.

According to a report from the Rio Grande do Sul civil defense department on June 11, as of June 10, the recent rainstorms have resulted in 175 deaths and 38 people missing in the state. Currently, 478 cities in the state are still in a state of emergency, with 18,800 people stranded in temporary shelters. The number of people affected by the disaster exceeds 2.3 million, accounting for approximately 20% of the state's population.