Affected by food prices, the National Consumer Price Index (IPCA) of December changed by 0.74%, reaching the highest figure in 2007 and almost twice as the November rate (0.38%). This way, IPCA in the year was 4.46%, that is, 1.32 percentage points above the index in 2006 (3.14%). There was inversion of the falling trend which had been observed in the five previous years (12.53% in 2002; 9.30% in 2003; 7.60% in 2004; 5.69% in 2005; and 3.14% in 2006). Year 2007 was characterized by severe fall of administered and monitored prices, which made it difficult form previous years.

Food products and beverages account for about half of IPCA in 2007

Among the groups, in 2007, the highest increase occurred to food products and beverages (10.79%). Household articles got the lowest result, -2.48%, as shown in the table below.  

Food products, with participation of 21.44% in the expenditure of families, became 10.79% more expensive in 2007, severely affecting this year’s IPCA: 2.21 percentage points. In other words, the group food products and beverages accounted for half of the overall index.

The item meats (22.5%) accounted for the main contribution to IPCA in 2007: 0.39 percentage points. In second place were milk and dairy products, with rise of 19.97% and contribution of 0.36 percentage points.  The prices of beans rose, on average, 109.20% and were the third major contribution to the IPCA of 2007: 0.31 percentage points.

Considering the change in food products, 10.79%, 3.93% referred to the first semester and 6.60%, to the second. The rise of food products is seen as a consequence of the following factors: unfavorable climatic conditions, with severe rain in the first semester and long dry periods in the second; high prices of products sold in the international market; increase of exports, favored by climatic problems in producing countries, reduction of harvest due to low compensations paid in previous periods; increase of the demand for food, both in the internal and in the external market.

Electricity is the main negative contribution

The prices of non-food products, which accounted for 78.56% of IPCA, increased by 2.83% in 2007, the lowest increment since 1998 (1.56%) and reached a significantly lower result compared to that in 2006 (4.23%). This happened because important items for family consumption faced significant decrease in the year, one example being electricity, which became 6.16% cheaper, and contributed little to the index in 2007: -0.23 percentage points. Fixed telephony closed the year with change of 0.34%, which was relatively low and did not affect the index significantly.

The table below shows the main items which closed the year with falling results:

In relation to non-food products, the change of 2.83% was due, mainly, to the following factors: a falling currency, which favored the cost of imported goods, stimulated competition and led to the reduction of electricity bills; the use of specific correction indexes replacing general ones (e.g.: telephony); changes in the telephony charging system from pulses to minutes, with reduction in some areas; inexistence of readjustment of gasoline prices (the last one occurred on March 2, 2006); and inexistence of readjustments of urban bus fares and of other public services in some areas surveyed.

Among non-food prices which kept on contributing to the increase of IPCA in 2007 can be mentioned:  cigarettes (9.56%), health insurance plans (8.11%), schools (5.04%) and urban buses (4.68%), among others.

Metropolitan area of Belém has highest inflation in the year

The metropolitan area of Belém had the highest IPCA in 2007 (7.10%) due, mainly, to the rises of food products (16.45%), which accounted for over half of the result, 4.74 percentage points. The highlights were “carioca” beans (150.58%), meats (32.01%), manioc flour (25.99%) and fish and related items (11.76%). Among non-food products, also presented significant rises condominium taxes (10.55%), urban buses (11.11%) and gasoline (3.24%).  

The lowest index was obtained in Curitiba (3.48%), where food products had the lowest change (7.15%). As shown in the table below, except for Rio de Janeiro, the other areas had indexes above those of 2006.

In December, food products have the highest increase since January 2003 and cause IPCA to reach 0.74%

In December 2007, the prices of food products reached 2.06%, the highest index since January 2003 (2.15%), and were the main responsible for the result of IPCA in the last month of the year: 0.74%. Having accounted for 0.44 percentage points, the group food products and beverages represented about 60% of the IPCA in the month. In the metropolitan area of Belém, the result of the group reached 3.79%.Belém, Salvador (3.27%) and Goiânia (3.24%) had the highest rise rates for food products in December.

The item meats (8.20%) accounted for the main individual contribution in the month: 0.16 percentage points. The rise reached 15.12% in Salvador; in second place was beans (32% on average), with contribution of 0.13 percentage points. “Carioca” beans, the most consumed type in the country, became 38.61% more expensive; in the metropolitan area of Salvador the price of this item rose by 68.55%.

For non-food products, the result of the December IPCA was 0.38%, also above the November figure (0.28%).

Fuels was in the third position in the general list of contributions, with 0.08 percentage points and changed by 1.58%. The rise of alcohol reached 9.35% and, as a consequence, the prices of gasoline, which has 25% of the product in its composition, rose 1.03%.  

Cigarettes also affected the IPCA in December, with 3.53% of change and contribution of 0.03 percentage points. The rise resulted from the readjustment which occurred on November 26, 2007. Another contribution came from intercity buses, which rose by 1.30% as a consequence of the readjustment of fares (5.00%), in Rio de Janeiro (4.18%) and in Belo Horizonte (1.34%). The fares of urban buses (0.35%) reflected part of the readjustment which occurred in Rio de Janeiro (5.00%).

Besides apparel (0.72%), especially children’s apparel (0.97%), other items affected IPCA in December: domestic workers (0.92%), condominium taxes (1.12%) new cars (0.78%) and health insurance plans (0.52%).

The highest index by area was registered in Belém (1.40%), where the rise of food products reached 3.79% and the contribution reached 1.16 percentage points, that is, it was responsible for 83% of the overall result. Besides food products, fuels (4.33%) and medicines (1.15%) also rose to higher figures in Belém than in other areas. The lowest index by area was registered in Curitiba (0.49%).

IPCA has been calculated by the IBGE since 1980.  It refers to families with monetary income, from any source, ranging from 1 to 40 minimum wages, and includes nine metropolitan areas of the country, besides the municipality of Goiânia, and Brasília.  To calculate the index of this month, prices collected between November 27 and December 26 (reference) were compared to those in effect between October 27 and November 26 (base). 

INPC reached 0.97% in December and accumulated 5.16 in 2007

The National Consumer Price Index (INPC) changed by 0.97% in December, a result above that of November (0.43%), and closed year 2007 at 5.16%. In 2007, the index of food products was 11.91%, whereas the index of non-food products increased 2.63%. In 2006, INPC was 2.81%, with rise of 0.94% for food products and 3.59% for non-food products. Considering the indexes by area, the highest one, in 2007, was observed in Belém (8.17%), and the lowest one, in Curitiba (3.75%).

In December last year, the change of 0.97% of INPC resulted from the indexes of 2.61% of food products and 0.32% of non-food products.

In the month, the highest index by area was registered in Belém (1.54%), and the lowest one, in Porto Alegre (0.46%).

INPC has been calculated by the IBGE since 1979 and it refers to families headed by a salaried worker with monetary income ranging from one to six minimum wages.  It includes nine metropolitan areas, besides the municipality of Goiânia, and Brasília.  To calculate the index of the month, prices collected from November 27 to December 26 (reference were compared to prices in effect from October 27 to November 26 (base).