Deflation and its effects in Brazil

Last month, the country's official inflation, as measured by the National Broad Consumer Price Index (IPCA),  released by the Brazilian Institute of Geography and Statistics (IBGE), stood at -0.23%, indicated deflation. This was the first negative result in 11 years.

Deflation means that the prices of products and services experienced a decline in June. What pulled them down, according to the IBGE, was the fall in the prices of electric energy, transport, and foods.

Deflation allows consumers to buy goods for less, which may point towards a recovery in the purchasing power at first. If long-lasting, however, deflation can also indicate economic difficulties.

Translated by Fabrício Ferreira