What is inflation?
Inflation, within the concepts of economics, is the name given to the generalized increase in the prices of products and services during a determined period of time. It is calculated using price indices, known as inflation indices.
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In the country, these indices are produced by several institutions, such as the Brazilian Institute of Geography and Statistics (IBGE) and the Getúlio Vargas Foundation (FGV). IBGE produces two of the most important indices: the IPCA (Broad National Consumer Price Index), considered official by the federal government, and the INPC (National Consumer Price Index).
How price indices are formed
The indices that measure inflation are formed from the average price variation of a basket of products and services, depending on the objective they are intended to achieve. For example, the IPCA is to monitor the variation in expenses of families with incomes of 1 to 40 minimum wages. The INPC measures the variation in the cost of living of families with lower purchasing power. There are also indices that monitor the evolution of agricultural and industrial prices or civil construction, among others.
You can even measure your inflation on the FGV portal.
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In the case of IPCA and INPC, the basket is defined by Family Budget Survey (POF), from IBGE, based on what the population consumes and how much of the family income is spent on each product: rice, beans, bus tickets, school supplies, medical supplies, cinema, among others. In this way, the variation in product prices and weight (in this case, percentage of weight) are taken into account.prometime) that they have in the family budget.
HICP
Produced by IBGE since December 1979, the IPCA is used by the federal government as Brazil's official inflation index, serving as a reference for inflation targets and changes in interest rates. It is the index commonly used to correct salaries, rents, exchange rates, savings and everything that needs to be monetarily updated.
The IPCA tracks the average variation in spending on a group of products and services used by families with a monthly income of 1 to 40 minimum wages living in urban centers. The survey is carried out from the 1st to the 30th of each month in the metropolitan regions of several capitals in the country. IBGE also produces the IPCA-15 – the collection period runs from the 16th of the month to the 15th of the following month – and the IPCA-E (Special), which measures the index accumulated each quarter by the IPCA-15.
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INPC
INPC follows the variation in the average cost of living of families with a monthly income of 1 to 5 salaries minimums. This group is most affected by variations in the prices of basic items, such as food and transportation, in which families withpromehas almost all of his income.
This is the index used as a reference to define the minimum wage, readjust salaries and pensions paid by the INSS (National Social Security Institute).
PGI
O IGP (General Price Index) is produced by Getúlio Vargas Foundation (FGV) since the 1940s. It follows the evolution of prices at various stages of the production process of different activities.
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The IGP is the weighted arithmetic average of three other price indices: the IPA (Broad Producer Price Index), which measures wholesale prices, with a weight of 60%; the IPC (Consumer Price Index), which measures consumer prices, with a weight of 30%, and the INCC (National Construction Cost Index), which calculates the variation in prices in the construction sector, with a weight of 10%.
The IGP has three versions with different collection periods: IGP-DI (between the 1st and the last day of the reference month), IGP-10 (from the 11th to the 10th) and IGP-M (from the 21st to the 20th). It is used to adjust rent, school fees, health plans, among others.
IPC-Fipe
O CPI (Consumer Price Index), calculated by FIPE (Economic Research Institute Foundation), began to be produced in 1939 by the Statistics and Documentation Division of the São Paulo City Hall. It was then carried out by the Institute of Economic Research, linked to the Department of Economics at USP, from 1968 until 1973, when FIPE was created.
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It monitors the variation in the cost of living of families with income between 1 and 10 minimum wages within the city of São Paulo. Price collection is based on the POF (Family Budget Survey) weekly.
Other indices
- IPCA-15 – Broad National Consumer Price Index 15
- IPCA-E – Special Broad National Consumer Price Index
- IPP – Producer Price Index – Extractive and Processing Industries
- SINAPI – National Civil Construction Cost and Indices Research System
- INCC – National Construction Cost Index
- IPA – Broad Producer Price Index
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