The cost of living in Brazil rises 1.83% in the quarter

Official inflation in the country was 2.09% in the first quarter of 2023.

Still, Brazilian families felt a smaller effective increase in the cost of living in the period, of 1.83%, according to the Household Expenditure Price Index (IPGF).

The new inflation index developed by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre/FGV) considers the effective spending of Brazilian consumers, who managed to circumvent part of the price increases in the economy by substitutions in the consumption basket.

“When consumers substitute rice for pasta or red meat for white meat or stop consuming fuel and use public transportation more because of price increases, for example, the substituted items lose weight in the IPGF, and their increases contribute less to the index and vice-versa.”

“Thus, in the long run, this effect ends up generating a lower inflation figure,” explained Matheus Peçanha, the economist in charge of the Ibre/FGV research, in an official note.

The IPGF uses household consumption data in the System of National Accounts of the Brazilian Institute of Geography and Statistics (IBGE), measured and compiled by the FGV’s GDP Monitor, to update the weight of items in the basket of products and services whose prices are surveyed monthly.

With information from Exame

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