IPCA
New consumption habits change inflation calculation from January 2020 on
October 11, 2019 10h00 AM | Last Updated: October 25, 2019 12h46 PM
Products and services used to measure the official inflation in the country will be updated to keep up with changes in the population's spending habits. From January 2020 on, the Extended National Consumer Price Index (IPCA) will look at the price changes of 56 new items. The release is scheduled for early February.
The list includes new trends, such as transportation apps and streaming services, pet grooming and care, and fast-food products such as instant noodles. Other examples that will become part of the official inflation calculation are services related to healthy life and beauty, such as eyebrow design, hairdresser and barber, waxing and physical activities.
The survey update also cuts off items that have lost space or been excluded from household expenditures, such as DVD players, newspaper subscriptions, and cameras.
These changes in the components of inflation are based on the results of the 2017-2018 Household Expenditure Survey (POF), which updated household consumption, spending and income habits. With 377 products and services, the new IPCA weighting structure has six subitems less than the current 2008-2009 POF model in effect since January 2012.
“We have been without POF for a long time and the technology pattern changes more and more quickly. We had to exclude some items that are indeed out of the market. At the same time, we had the introduction of products that are in the daily lives of millions of Brazilians,” explained IBGE Price Index Manager Pedro Kislanov.
The IPCA reflects the consumption basket of families with monthly income from one to 40 minimum wages and covers ten metropolitan areas of the country, as well as the municipalities of Goiânia, Campo Grande, Rio Branco, Sao Luis, Aracaju and Brasilia.
Transportation surpasses food and become the major weight in the IPCA
Another change is the weight of the IPCA transportation group, which for the first time will be the main inflation component, with 20.8% of the indicator, despite reducing its representation, which was 22%. The group outperformed food and beverages, which decreased its participation from 22% to nearly 19%.
There was a reduction in the weight of public transportation, which went from 4.50% to 3.16%. Additionally, integration tickets for public transportation (0.07%) and transportation apps (0.21%) were incorporated. Also in this group, the weight of 11.66% of vehicle ownership points out to other household expenditures with products and services such as license plates, insurance and parking.
The National Consumer Price Index (INPC), in turn, which calculates the inflation of households with income from one to five minimum wages, continued with food and beverages as their largest group, but reducing its share from 27.3% to about 21.5%. As in the IPCA, transportation gained about 1.8 percentage points, reaching 20%.
"The increase in the weight of transportation can be explained by the lower number of options for this service, while in food, families find it easier to replace some products in order to save money," explained the IBGE Price Index manager.
Rio de Janeiro is the area with the greatest participation loss
The metropolitan area of Rio de Janeiro lost the most weight between the current and the new IPCA structure, from 12.06% to 9.41%. Belo Horizonte also lost participation, going from 10.86% to 9.84%, while Rio Branco, even with gain of 0.09 percentage points, remained with the lowest influence, of 0.51%.
On the other hand, São Paulo remained with the largest weight in the IPCA, from 30.67% to 32.32%. Brasilia also had a significant increase, going from 2.80% to 4.09%.
Kislanov explained that there are differences between the calculation of the IPCA and of the INPC. “In the case of the IPCA, the regional weighting is based on the household income. In Brasilia, for example, the income is higher, and that may have had some effect [on this increase]. As for the INPC, the weighting factor is the urban resident population, and we saw that both in São Paulo and Rio there was not so much changes,” he explained.
