IGP-M rises 0.21% in January 2023
The General Price Index – Market (IGP-M) rose 0.21% in January, after increasing 0.45% the previous month. As a result, the index is up 3.79% in the last 12 months. As of January 2022, the index had increased 1.82% that month and 16.91% in the previous 12 months.
“Among IGP-M’s component indexes, the producer price index continues to indicate a cooling of inflationary pressures. The prices of raw materials decelerated from 2.09% to 1.55% and, among intermediate goods, whose rate went from -0.30% to -1.06%, the fall was intensified due to the behavior of fuels and lubricants for production, whose prices dropped even more, from -2.26% to -5.05%. In the opposite direction of producer inflation, consumer inflation rose from 0.44% to 0.61% in December, due to increases in school and course fees, which increased by an average of 4.55%,” says André Braz, FGV’s price index coordinator.
Broad Producer Price Index (IPA)
The Broad Producer Price Index (IPA) went up 0.10% in January, after rising 0.47% in December. Breaking down the results by processing stage, the prices of Finished Goods fell 0.05% in January, after declining 0.29% the previous month. The main contribution to this result came from the Fresh Foods subgroup, whose rate went from -0.29% to 2.64% in the same period. The Finished Goods (ex) Index, which excludes the Fresh Foods and Fuels for Consumption subgroups, increased 0.10% in January, after falling 0.09% the previous month.
The Intermediate Goods group’s rate went from -0.30% in December to -1.06% in January. This result was driven by the Fuels and Lubricants for Production subgroup, which went from -2.26% to -5.05%. The Intermediate Goods (ex) Index, obtained by excluding the Fuels and Lubricants for Production subgroup, fell 0.21% in January, after increasing 0.13% in December.
The Gross Raw Materials group’s rate rose 1.55% in January, after rising 2.09% in December. The main contributions to this slowdown came from the following items: iron ore (16.32% to 9.26%), sugarcane (0.28% to -0.60%) and beef (1.55% to 0.65%). On the other hand, the main upward moves were seen in raw milk (-4.75% to 0.22%) soybeans (-1.52% to -0.92%) and corn (-0.69% to 0.40%).
Consumer Price Index (CPI)
The Consumer Price Index (CPI) increased 0.61% in January, after rising 0.44% in December. Five of the index’s eight spending classes recorded increases in their rates of variation. The main contribution to this movement came from the Education, Publications and Recreation group (-0.26% to 2.04%). In this spending class, it is worth mentioning the behavior of the formal courses item, whose rate went from 0.00% in December to 4.55% in January.
There were also increases in the following groups: Transport (0.31% to 0.60%), Health and Personal Care (0.37% to 0.56%), Communication (0.48% to 0.79%) and Miscellaneous Expenses (0.08% to 0.26%). In these spending classes, there was notable behavior in the following items: vehicle tax (0.00% to 1.06%), hygiene and personal care products (-0.25% to 0.32%), phone, internet and pay TV packages (0.69% to 1.38%) and cigarettes (-0.72% to -0.17%).
On the other hand, the Food (0.99% to 0.61%), Housing (0.42% to 0.09%) and Apparel (0.67% to 0.25%) groups recorded decreases in their rates of variation. These spending classes were influenced by the following items: vegetables (9.75% to 2.10%), residential electricity charges (1.27% to -0.94%) and clothes (1.01% to 0.24%).
Civil Construction Index (INCC)
The Civil Construction Index (INCC) went up 0.32% in January, after rising 0.27% in December. The index’s three component groups recorded the following changes between December and January: Materials and Equipment (0.37% to -0.26%), Services (0.43% to 0.53%) and Labor (0.16% to 0.77%).
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2023 results disclosure calendar:
- January 30, 2023
- February 27, 2023
- March 30, 2023
- April 27, 2023
The complete calendar for 2023 will be released soon by Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE).
What is IGP-M?
The General Price Index – Market (IGP-M) is calculated and divulged monthly by Fundação Getulio Vargas’ Brazilian Institute of Economics (FGV IBRE). The indicator was created in the late 1940s to provide a comprehensive measure of price movements, encompassing not only different activities but also different stages of the production process. Thus, IGP is a monthly indicator of the level of economic activity in Brazil, covering its main sectors.
IGP has three versions with different price collection periods: IGP-10 (based on prices collected from the 11th day of the previous month to the 10th day of the current month), IGP-DI (from the first to the last day of the month), and the most popular one, the General Price Index – Market, or simply IGP-M (which collects information on price variations from the 21st day of the previous month to the 20th day of the present month).
IGP-M is used extensively in parametric formulas for adjusting electricity and phone charges, in rental contracts and in service contracts.
How is IGP-M calculated?
The calculation of IGP-M, like the two other indicators (IGP-10 and IGP-DI), takes into account variations in the prices of goods and services, as well as those of raw materials used in agriculture, manufacturing and construction. IGP-M is the weighted arithmetic mean of producer (IPA), consumer (CPI) and construction (INCC) inflation:
- Broad Producer Price Index (IPA);
- Consumer Price Index (CPI);
- Civil Construction Index (INCC).
The weighting of each component index corresponds to the respective share of gross domestic product, based on the national accounts, resulting in the following breakdown:
- 60% for IPA;
- 30% for CPI;
- 10% for INCC.
In this context, IPA is an indicator that monitors variations in prices perceived by producers, while CPI tracks the behavior of prices that directly affect end consumers. Finally, INCC presents construction costs, taking into account variations in the prices of construction materials and the cost of specialized labor.
How is IGP-M used?
IGP-M is one of the component indexes of parametric formulas used by phone and power companies, contributing partially to calculations of price adjustments in these sectors. The General Price Index – Market is also used as a contractual benchmark for companies providing services in various sectors, such as education and health insurance. IGP-M first became popular when it became widely used as a reference for the real estate sector, to adjust rents.
Due to its consistent disclosure since the 1940s, IGP-M is also mentioned in many public and private sector contracts in a wide variety of sectors. Some of its components, such as the Broad Producer Price Index (IPA), also serve as a benchmark for price adjustments.
