1. Inflation rate rises in September due to electricity and food prices

The Broad Consumer Price Index (IPCA) rose by 0.44% in September, contrasting with a drop of -0.02% in August (year-to-date, the index totals 3.31%, and over the past 12 months, it reached 4.42%, above the previous period’s 4.24%). This increase was driven by the Housing (1.80%) and Food and Beverages (0.50%) sectors, which together contributed significantly to these results. The rise in residential electricity prices, due to a higher tariff, was the main factor for the hike, with adjustments in cities like Porto Alegre and Vitória. In the food sector, price increases for items such as papaya and ground coffee also impacted the index.

Meanwhile, the National Consumer Price Index (INPC), which measures price variations for lower-income households, increased by 0.48% in September, accumulating 3.29% for the year and 4.09% over 12 months. Similar to the IPCA, food products rose by 0.49%, ending two months of declines, while non-food products saw a 0.48% increase in prices. Goiânia recorded the highest regional variations, influenced by the increase in gasoline and electricity prices. On the other hand, Aracaju registered the lowest variation, due to price drops in onions and tomatoes.

IBGE: IPCA foi de 0,44% em setembro

2. Retail sales drop by 0.3% in August with declines in personal and household items

Retail sales in Brazil fell by 0.3% in August, following a 0.6% increase in the previous month, according to the Monthly Retail Trade Survey (PMC) from the Brazilian Institute of Geography and Statistics (IBGE). The decline was driven by lower sales of personal and household items and was better than market expectations, which predicted a 0.6% drop. Year-to-date, the sector has seen a 5.1% increase, while over the past 12 months, growth stands at 4.0%. On an annual basis, sales grew by 3.1% compared to August 2023.

Despite a positive start to the year, boosted by increased credit and employment levels, the recent rise in the Central Bank’s basic interest rate (Selic), in response to the economy’s growth, has brought expectations of a slowdown in the second half of the year. This scenario may affect household consumption, which had been benefiting from higher income and greater credit availability in previous months.

O Globo: IBGE: Comércio caiu 0,3% em agosto, com recuo em 7 dos 8 grupos pesquisados
IBGE: Em agosto, vendas no varejo variam -0,3%

3. Electricity bills expected to remain high until the end of the year, with relief forecast for January

Electricity bills, which rose by 5.3% in September and contributed to inflation, are expected to continue to rise until December. Higher tariffs are due to low water reservoir levels in the Southeast and Center-West regions, where it is currently around 44%. There is a need to activate thermal power plants to conserve water from hydroelectric dams. Although rainfall is expected during the wet season, which lasts until March, its impact on reservoirs will not be immediate.

The Difference Settlement Price (PLD), which regulates energy prices, is at its higher limit and is likely to remain high until the end of the year. The forecast is that tariffs will only drop in January 2025, with PLD reduction expected by February. Even with rain, the summer of 2024 will have high electricity prices, similar to what happened in 2022.

O Globo: Depois de subir mais de 5% em setembro, conta de luz só deve ter alívio em janeiro; entenda

4. Senate approves Gabriel Galípolo as new president of the Central Bank

The Brazilian Senate approved the appointment of economist Gabriel Galípolo as the new president of the Central Bank, with 66 votes in favor and 5 against. Galípolo, nominated by President Lula, will replace Roberto Campos Neto, whose term ends on December 31. Galípolo, who currently holds the position of Director of Monetary Policy at the Central Bank, will begin his four-year term in 2025.

During the hearing in the Economic Affairs Committee (CAE), Galípolo addressed issues such as the Central Bank’s independence, inflation control, and his relationship with the current president, Roberto Campos Neto. His administration will be closely watched, given President Lula’s past criticisms of the previous administration, especially regarding interest rate policies. Galípolo had already been approved by the Senate in 2023 for the position of Director of Monetary Policy at the Central Bank.

Agência Senado: Senado aprova Gabriel Galípolo para presidir Banco Central
G1: Senado aprova Gabriel Galípolo para a Presidência do Banco Central

5. Platform X cleared to operate in Brazil after complying with court rulings

After 39 days of suspension, the social media platform X, formerly known as Twitter, has been cleared to resume operations in Brazil. The decision was made by Supreme Court Justice Alexandre de Moraes after the platform, owned by Elon Musk, complied with all Brazilian court orders, including the removal of profiles and the payment of fines totaling R$ 28.6 million.

The suspension had been ordered in August, during the electoral period, due to the company’s failure to comply with court rulings. In addition to paying the fines, X appointed a representative in Brazil and met other legal requirements. The National Telecommunications Agency (Anatel) has already begun notifying telecommunications providers to unblock access to the platform, a process that will happen gradually due to the technical specifications of each provider.

Folha: Moraes libera volta do X, antigo Twitter, no Brasil, após empresa de Musk cumprir decisões
Agência Brasil: Prestadoras são notificadas pela Anatel para liberar acesso ao X