Brazil's inflation rate accelerated in August, driven by an increase in power bills following the end of a discount that households received in July. The Itaipu power station played a significant role and housing prices also had an influence.
Troy D. Hanson
September 12, 2023
Brazil's inflation rate accelerated in August, driven by an increase in power bills following the end of a discount that households received in July. According to the Brazilian Institute of Geography and Statistics (IBGE), consumer prices rose by 0.23% from July and 4.61% from the previous year. Comparatively, in July, prices increased by 0.12% from the previous month and 3.99% from a year earlier.
Impact of Itaipu Power Station
The Itaipu power station, located on the Paraná river between Brazil and Paraguay, generated a significant profit in 2022. As a result, a portion of that money was returned to Brazilian consumers in July through a one-time discount on their electric bills. However, in August, power bills surged again, offsetting the temporary relief experienced the previous month.
Housing Prices & Power Bill Influence
In addition to the effect of the discounted power bills, housing prices, which include electric bills, saw a significant shift. Following a decline of 1.01% in July, housing prices rose by 1.11% in August. The increase in residential power prices by 4.59% in August was also influenced by rate hikes in certain Brazilian cities.