High airfare and energy prices raise cost of living in Brazil’s Greater São Paulo – FecomercioSP

RIO DE JANEIRO, BRAZIL – The Cost of Living per Social Class (CVCS) in the São Paulo metropolitan region increased 1.06% in July, according to the Federation of Commerce of Goods, Services and Tourism of the State of São Paulo’s (FecomercioSP) indicator.

The percentage is the highest variation for the month since 2011, when the survey began.

The increase was driven by the transportation group, mainly by the price of airline fares, which rose 42.67%. In the housing group, electricity increased 12.45% in July, accumulating 26.25% in 12 months.

According to FecomercioSP, the increase in electricity tariffs was expected due to the use of thermoelectric plants caused by low water reservoir levels.

The increase in the price of airline tickets was associated with the growth in demand during the July school vacation period. However, FecomercioSP says that it should not continue to be pressured in the coming months.

POORER

According to the association, the E (poorest) class is the segment that most feels the increase in the cost of living. Among the poorest the variation is 1.49%, but for class A it is 0.70%. The average increase in fuel prices reached 4.21%. “This is almost 3 times the variation for class A, of 1.47%,” FecomercioSP says.

The food group offered some relief to residents in the São Paulo metropolitan region, with a negative variation of 0.54%. However, over the 12-month period, the group has increased by 10.86%.

For the higher income classes, the weight of this group is lower, at 9%. For families in the E class, the accumulated figure reaches 14.36%. The price of meat, for instance, rose 34.68% in the past 12 months, despite a slight increase of 0.12% in July.

“FecomercioSP’s forecast is that the pressure on prices will continue because of the climate issue, which will affect energy production. Moreover, there is a rise in commodity prices [primary products quoted on the international market], which impacts costs and food and fuel prices,” reads a statement released by the entity.

METHODOLOGY

The CVCS comprises the Services Price Index (IPS) and the Retail Price Index (IPV), using data from the Household Expenditure Survey (POF) of the Brazilian Institute of Geography and Statistics (IBGE). The data covers the 5 family income ranges (A, B, C, D and E) to assess the impact of price hikes in Greater São Paulo in 247 consumer items.

According to FecomercioSP, the IPV and the IPS indicate that inflation is concentrated on products. The retail index rose 1.6% in July. In turn, the services price indicator rose 0.55%. The IPV has accumulated a high of 14.85% in 12 months, and the IPS, of 3.85%.