SAO PAULO - February's IPCA-15 inflation was 1.33% month-on-month. Year-on-year IPCA-15 inflation increased from 6.7% in January to 7.4% in February.
The average of core inflation measures (core inflation by exclusion, core inflation by trimmed means with smoothing, and double-weighted inflation) increased from 0.73% mom (6.5% yoy) in January to 0.96% mom (6.8% yoy) in February. The main drivers of February's IPCA-15 inflation were: Residential energy, with a contribution of 0.23pp to overall inflation; Courses (0.21pp); and Fuels (vehicles) (0.15pp).
The higher IPCA-15 inflation in February in comparison with the previous month was driven by the significant acceleration in administered prices and the hike in inflation in services and industrial goods:
- Inflation in administered prices (weight of 22.86% in IPCA-15) increased from 1.00% mom (6.0% yoy) in January to 2.76% mom (8.6% yoy) in February. The rise was explained mostly by: (i) higher electricity inflation due to the implementation of the red tariff tier for residential customers in the previous month (from 2.60% mom in January to 7.70% to in February); (ii) a rise in the PIS/Cofins tax on gasoline (from -0.05% mom in January to 2.96% mom in February); and (iii) an increase in public transportation fares in various capital cities of Brazil (inflation rose from 2.85% mom in January to 7.41% mom in February). The percentage of items that posted price increase in the group rose from 67.6% in January to 70.6% in February, equal to 70.6% in February 2014.
- Services inflation (weight of 36.09% in the IPCA-15) increased from 0.86% mom in January to 1.20% mom in February and remained stable at 8.7% yoy in the period. The monthly increase was explained mainly by the increases in courses (from 0.16% mom in January to 7.29% mom in February), which will have more than offset lower inflation in airfares, domestic workers, and residential rent (Exhibit 4). The percentage of items that posted price increase rose from 60.6% in January to 83.3% in February, versus 87.9% in February 2014.
- Industrial goods inflation (weight of 24.88% in the IPCA-15) increased from 0.31% mom (3.9% yoy) in January to 0.57% mom (4.0% yoy) in February. The bulk of the increase in inflation of industrial goods was primarily the acceleration in automobile prices, owing to the normalization of the Tax on Industrialized Products (IPI) rate in the previous month. Other highlights in the month were rises in prices of cigarettes and alcohol, accompanying the hike in gasoline prices (Exhibit 5). The diffusion index of industrial prices dropped from 70.6% in January to 55.5% in February, versus 66.4% in February 2014.
The components with a negative contribution to the month's result were: Milks and dairy products (-0.03pp); Womenís clothes (-0.03pp); and Menís clothes (-0.02pp).
Inflation in the food-at-home subgroup (weight of 16.17% in the IPCA-15) decreased from 1.73% mom in January to 0.77% mom in February. The result was explained mainly by the reduction in meat prices (inflation declined from 3.24% mom in January to 0.49% mom in February), following a seasonal pattern, and by the deceleration in the prices of perishable foods. The diffusion index of this subgroup decreased from 74% in January to 71.9% in February, versus 65.8% in February 2014.