Inflation determined by the index National Consumer Price Index (INPC) closed the month of August at -0.21%. Result is the first deflation -average price drop -since August 2024, when it registered -0.14%.
August also marks the sixth month in a row with loss of strength from INPC. In February, the index even crashed 1.48%. In July closed at 0.21%. The data were released on Tuesday (10) by Brazilian Institute of Geography and Statistics (IBGE).
In the accumulated 12 months, the index reaches 5.05%, below 5.13% of the 12 months ended in July.
Used for readjustments
INPC is widely used as an index for annual salary adjustment calculation of various categories.
The minimum wage, for example, in addition to other metrics, takes the November annual INPC to reach the following year. Unemployment insurance, the benefit and ceiling of the INSS are readjusted based on December’s outcome.
Light and food
In August, housing was the group that most helped to overthrow inflation. It fell -1.04%, representing impact of -0.18 percentage point (PP) on INPC. Much of this relief was caused by the light bill, which recorded a 4.32%reduction.
The main explanation is in the Itaipu bonusdiscount that families received in the electricity bill that compensated the Red Tariff Flag, which adds R $ 7.87 to the electricity bill for every 100 kWh consumed.
The second largest negative impact on inflation was the price of food, which fell 0.54% on average (-0.13 pp). It was the third deflation followed by this price group.
INPC Profile
The INPC investigates inflation for families with income up to five minimum wages. This is the main difference to the Broad National Consumer Price Index (IPCA), known as official inflation, responsible for measuring the evolution of the cost of living of families with income of one to 40 minimum wages. Currently the minimum is $ 1,518.
IBGE announced, also on Wednesday, that the IPCA registered -0.11% in August.
The institute gives different weights to the surveyed price groups. In INPC, for example, foods represent 25% of the index, more than in the IPCA (21.86%), as families of lower income spend proportionally more food. From the reverse perspective, the airplane ticket price weighs less in the INPC than on the IPCA.
According to IBGE, the investigation of INPC “aims to correct the purchasing power of salaries, through the measurement of price variations of the consumer basket of the lowest yield wage population.”
Price collection is done in ten metropolitan regions: Belém, Fortaleza, Recife, Salvador, Belo Horizonte, Vitória, Rio de Janeiro, Sao Paulo, Curitiba and Porto Alegre. In addition to Brasilia (DF) and the capitals Goiânia (GO), Campo Grande (MS), Rio Branco (AC), São Luís (MA) and Aracaju (SE).
