General Price Index – Market rises 1.92% in early February
The General Price Index – Market (IGP-M) rose 1.92% in the first 10 days of February. In the first 10 days of January, it increased 1.89%. As a result, the 12-month rate went from 24.87% to 28.17%.
“The Broad Producer Price Index, the indicator that has the biggest influence over IGP, continues to accelerate, reflecting increases in the prices of agricultural and industrial commodities. These inflationary pressures are feeding through to production chains. The rate for intermediate goods increased almost one percentage point in comparison to last month, from 1.38% to 2.34%. The behavior of soybean prices (-5.17% to 5.78%) and soybean meal prices (-5.16% to 4.23%) illustrates the transfers observed in production chains,” says Price Index Coordinator André Braz.
Broad Producer Price Index
The Broad Producer Price Index rose 2.54% in the first 10 days of February. In the same period of January, it increased 2.42%. Looking at different processing stages, the prices of finished goods went up 0.21% in February, after rising 1.04% in January. The main contribution to this movement came from the processed foods subgroup, whose rate went from 1.01% to -2.81%. The index corresponding to intermediate goods went from 1.38% in the first 10 days of January to 2.34% in the first 10 days of February. This was influenced by the materials and components for manufacturing subgroup, whose rate went from 0.33% to 2.24%.
The raw materials processing stage’s rate went from 4.36% in the first 10 days of January to 4.45% in the same period of February. The main drivers were the following items: soybeans (-5.17% to 5.78%), beef (-4.16% to 8.03%) and corn (-3.18% to 5.71%). On the other hand, items with major decreases included iron ore (23.45% to 5.74%), milk (2.84% to 0.12%) and pork (-3.58% to -10.49%).
Consumer Price Index (CPI)
The Consumer Price Index (CPI) went from 0.38% in the first 10 days of January to 0.19% in the first 10 days of February. Four of the index’s eight component spending classes registered declines in their rates of variation, especially the Housing group (1.06% to -0.21%). In this spending class, it is worth mentioning the behavior of the Residential Electricity Charges item, whose rate went from 3.40% to -2.48%. There were also declines in the variation rates for Food (0.97% to -0.04%), Health and Personal Care (0.44% to -0.20%) and Apparel (1.31% to -0.08%). These spending classes were influenced by the following items: Vegetables (3.45% to -2.45%), Hygiene and Personal Care Products (1.19% to -1.29%) and Clothes (1.26% to -0.05%).
In contrast, Education, Reading and Recreation (-2.99% to 0.91%), Transport (0.60% to 0.96%), Miscellaneous Expenses (0.05% to 0.29%) and Communication (-0.07% to 0.02%) registered higher rates of change. In these spending classes, the largest contributions came from the following items: Airfares (-23.32% to -3.09%), Gasoline (0.86% to 2.88%), Religious and Funeral Services (-0.02% to 0.78%) and Monthly Pay TV Charges (-0.31% to 0.00%).
Civil Construction Index (INCC)
The Civil Construction Index (INCC) changed 0.60% in the first 10 days of February, down from 0.94% the previous month. INCC’s three components recorded the following rates of change between the first 10 days of January and the first 10 days of February: Materials and Equipment (1.66% to 1.23%), Services (0.06% to 0.71%) and Labor (0.53% to 0.08%).
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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.
2021 publication calendar:
- - January 28
- - February 25
- - March 30
- - April 29
* The complete calendar for 2021 will be presented soon.
Previous years’ results:
How IGP-M is 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 IGP-M is 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.