IGP-DI ends the month with 0.58% deflation, influenced by the fall in commodities

An indicator of the Getúlio Vargas Foundation (FGV) to measure inflation, released this Tuesday (7), the General Price Index-Internal Availability (IGP-DI) registered 0.58% deflation in November.

Influenced by the scenario of falling commodity prices on the international market, driven mainly by reductions in iron ore, soybeans and corn, the drop was greater than expected by economists.

Deflation comes after an October high of 1.60%. In the same period last year, an increase of 2.64% was registered. Over the past 12 months, the indicator rose 17.16%. If only data from 2021 are taken into account, the increase is 16.28% in the first 11 months of the year.

The fall from October to November was mainly motivated by wholesale prices, measured by one of the four items of the indicator: the Broad Producer Price Index (IPA), in which there was deflation of 1.16%. The series was up 1.90% in September.

The movement was mainly influenced by processed foods, which use agricultural commodities: from 0.81% to -0.56%.

According to André Braz, coordinator of the FGV Price Index, deflation is fully explained by the drop in commodity prices. The IGP-DI methodology seeks to anticipate inflationary trends in the market, in relation to that used by the IBGE’s Broad National Consumer Price Index (IPCA), which measures official inflation.

“Iron ore fell by almost 25%. This means relief in sectors that use this raw material, such as civil construction, which also uses steel plates, such as large industry, which uses them in appliances and cars. Agricultural commodities also showed a drop in prices.

The reduction in corn influences the price of feed, which affects the entire poultry and egg sector. We are one step away from seeing cheaper chicken prices on supermarket shelves”, he says.

The biggest drop occurred in iron ore, which changed from a 4.29% increase in September to —24.98% in October. This is the third most exported product by the country, after soy and crude petroleum oils. There was also a drop in soybeans (from -0.38% to -3.73%) and in corn (-4.45% to -5.15%).

The Consumer Price Index (IPC), the component that measures the behavior of retail, increased: from 0.77% in October to 1.08% in November. The National Civil Construction Index (INCC) dropped, but maintained a positive level, despite the slowdown: from 0.86% to 0.67%.