Brazil’s inflation slows, but its plummeting currency is still making the basics unaffordable

Let’s not get too excited.
Let’s not get too excited.
Image: Reuters/Ueslei Marcelino
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Brazil’s national statistics bureau, the Brazilian Institute of Geography and Statistics (IBGE), said the country’s CPI index—used to measure inflation—fell to 6.27% from 6.7% last month, in a report out this morning. The biggest drops came in food and beverages, clothing and transportation prices, which have been a source of public unrest over the past couple months.


That puts inflation within Brazil’s 2.5% to 6.5% target range, but it may still not be low enough to counter the effects of Brazil’s free-falling currency. The Brazilian real is at its weakest level in four years, which isn’t helping lift morale in the country, and certainly isn’t making it any easier for Brazilians to afford basic goods. Brazil should aspire to inflation rates closer to its target rate of 4.5%, not ones merely within its target range.