IBGE released for the first time, the Harmonized National Consumer Price Indexes – IPCH for Mercosul members (Brazil, Argentina, Paraguay, Uruguay) and for Chile, with data about price changes of the main goods and services in these five Latin American countries. Started in the beginning of the 1990’s, the project has as its main objective the comparison among inflation rates of the participating countries. Measured in partnership with the National Institutes of Statistics of Mercosul and Chile, and the Central Bank of Paraguay the index is being released today by each member of the project, which incorporates the experience of harmonization of consumer price indexes in Europe. Indexes series for the period 1999 - 2004 are being released.

In the accumulated index from January 2000 to December 2004, the highlights were Uruguay (63.2%) and Chile (16.1%)

The data released show a time series of prices of twelve items, subdivided into groups of principal categories, consumer goods and services of the aforementioned countries, from 1999 to 2004.

Uruguay was the country that registered the highest accumulated changes from January 2000 to December 2004 (63.2%), followed by Brazil (53.5%), Argentina (52.9%), Paraguay (51.7%) and Chile (16.1%). In Uruguay, Transportation accounted for the highest figures (105.3%) and Apparel and Footwear presented the lowest figures in this period (36.0%). In Brazil, the highest contribution came from Food Products and Non-alcoholic Beverages (60.5%), followed by Transportation (59.4%), Rent, Water, Electricity, Gas and Other Fuels (55.1%), and the lowest figures were related to Health Services (34.8%). In Argentina, the highest figure (93.4%) was registered in the price of alcoholic drinks and cigarettes, and the lowest, Communication (8.6%). In Paraguay, Communication (256.2%) registered the highest changes and Health (23.0%), the lowest. In Chile, Transportation registered the highest figures (42.9%), whereas Apparel and Footwear had a negative change of 20.6%.

In Brazil, IPCH accumulated 7.7% in 2004

In 2004, the accumulated change in Brazil was the highest in the countries where the index is measured. In this same year, Uruguay, with a very similar result, 7.3%, was in second place. In Argentina, in 2002, the highest IPCH accumulated in 12 months, among all time series calculated, was measured: 42.4%. In the period, the lowest annual result was observed, in 2001, also in Argentina. On this occasion, there was deflation of 1.8%. Concerning Brazil, the highest change of annual IPCH closure (13%) was observed in December 2002, and the lowest (6.5%), in 2000.

The results of the IPCH will be handed to the national authorities of the countries of the MERCOSUL and Chile. They will also be available on the web sites of the participating institutions from this date on.

Five institutions participated in the index harmonization

The main objective of the project was to establish a continuous and systematic process of index measurement. From now on, the countries will be part of an experimental process of quarterly production of IPCH, in order to make it continuous until the beginning of 2006, as determined by authorities in the countries involved.

The harmonization project requires continuous methodological improvement, with the inclusion of goods and services that have not been included in the results presented. This necessity of inclusion or exclusion of goods and services in the harmonized baskets is related to the changes in the consumption habits of families and to the comparison between calculation and data collection methodologies used.

 The institutions involved in the elaboration of IPCH are the National Institute of Statistics and Censuses - INDEC, from Argentina; the National Institute of Geography and Statistics – IBGE, from Brazil; the National Institute of Statistics - INE, from Chile; the National Institute of Statistics - INE, from Uruguay and the Central Bank of Paraguay - BCP, with the technical orientation of the European Union and with the help of the Economy Commission for Latin America and for the Caribbean - CEPAL/Chile.

IPCH has as its references the resolutions and the manual of the International Organization of Labor (OIT) about Consumer Prices. Harmonized IPC took into consideration the harmonization in the countries from the European Union.

IPCH will not substitute official IPCs (Consumer Prices)

The Harmonized National Consumer Price Index (IPCH) of MERCOSUL and Chile is one more piece of information related to the inflation process in those countries, without replacing the official index (IPC), but aggregated to it in the comparative analysis of changes in consumer prices.

The harmonized product baskets used in the calculation of IPCH are subdivisions of the baskets of national IPCs. In relation to Brazil, IPCH is a subdivision of the basket of the Extended Consumer Price Index -IPCA.

The IPCHs result from changes in prices calculated in the scope of the official IPCs of countries and, concerning Brazil, the difference between the results of the Extended Consumer Price Index (IPCA) and IPCH lies in methodological aspects which were harmonized and by the exclusion of a group of products in five countries, whose collection or calculation methodologies are not comparable.

Level of coverage of IPCH takes into consideration the percentage of the urban population in each country

Several methodological aspects included in the calculation of IPCs were measured in order to evaluate the level of harmonization of indexes obtained from them. Different methods applied in each country were detailed. In terms of geographical and populational coverage, the representation and comparison were observed, by studying the criteria of each country’s IPC and by identifying the percentage of the urban population covered by the official IPC.

Harmonized baskets excluded some items

One of the main aspects in the harmonization process was the balance between representation and comparison criteria in the formation of baskets of goods and services. The items contributing with 0.1% or more in any country were incorporated to the harmonized basket.

Goods and services constituting the baskets used by IPCs of some countries, but which do not permit comparison in terms of consumption patterns; in the collecting of prices; and in the estimation of weights, were not incorporated to the items of IPCH. Thus, the following items are not part of the estimate: Services for the preservation and repair of dwellings; Medical services /Hospital services/ Insurance; Patents and licenses for the circulation of vehicles; Gambling; Insurance services in general and Financial Mediation Services /Other Financial Services.

The coverage of harmonized baskets in relation to the official ones is shown below:

The result obtained after using such criteria was a group of five baskets comparable among themselves and significant of the consumption in each country. The importance of these baskets is measured by the proportion of the weights of official IPCs, included in the harmonized baskets. The two charts below show the importance of dealing with a common classification.

The chart below shows the classifications used today in the official IPCs in each of the 5 countries:

The use of a common classification makes it possible to build the scenario of changes accumulated in the 12 groups of consumer items previously seen, as well as the weights related to each division.

The common classification also allows the comparison of indexes in more specific levels.