Inflation in the Real Plan: see IPCA ranking since 1994 – 02/03/2024 – Market

Air tickets and bottled gas accumulated the highest inflation rates in a ranking that shows the price variations of 20 goods and services since the beginning of circulation of the real, almost 30 years ago.

The Brazilian currency began to circulate in Brazil on July 1, 1994. Previously, on March 1 of that year, prices began to be fixed in URV (Real Unit of Value), which made the transition until the arrival of the new currency. The URV was implemented through a provisional measure (MP) on February 27, 1994.

Until December 2023, the increase recorded by plane tickets in Brazil was 2,728%, while that of gas reached 2,370%, according to a survey by economist Bruno Imaizumi, from LCA Consultores, at the request of Sheet.

Residential rent (1,439%), domestic employee (1,242%) and water and sewage fees (1,209%) appear next. The analysis takes into account data from the IPCA (Broad National Consumer Price Index).

Urban buses (1,183%), snacks (1,099%), residential electricity (1,007%), French bread (996%) and gasoline (932%) complete the list of the ten biggest price increases since July 1994.

Imaizumi says that the significant variations, if evaluated alone, can convey the idea of ​​a supposed lack of inflationary control, precisely what was fought under the Real Plan.

According to the economist, it is also necessary to take into account that the purchasing power of the Brazilian population has increased in the last three decades.

In this sense, Imaizumi points out that the minimum wage increased by 2,359% in the period from July 1994 to December 2023 – the minimum ended last year at R$1,320 and rose to R$1,412 at the beginning of 2024.

Of the 20 products and services covered by the survey, only air tickets (2,728%) and bottled gas (2,370%) rose more than the minimum wage (2,359%). In the general average, the IPCA accumulated an increase of 690.09% in the real period.

“With the control of hyperinflation, which was a problem in Brazil before the Real Plan, there was a gain in purchasing power. The minimum wage grew more than inflation for almost all products and services on the list”, says Imaizumi .

“If we just say that prices rose, it would seem that we had a tragedy, but it wasn’t like that. Salaries also increased”, he adds.

The 20 products and services in the survey were selected because they were among the 30 sub-items that weighed most in the IPCA calculation in December 2023.

It is not possible to analyze all 30 sub-items since July 1994 because ten were not part of the index basket at the time or had changes in the way they were calculated since then – throughout the historical series, some products and services were grouped or separated.

In the case of air tickets, Imaizumi associates the price tag with issues such as the increase in fuel prices used in airplanes and low competition in the airline sector.

“In bottled gas, it has the effect of it being a petroleum derivative. We also had assistance with the purchase of gas, subsidies, increased input prices at the point of sale. There are several factors that help explain the rise in prices”, he states.

According to the survey, used cars have recorded, since July 1994, the lowest inflation among the 20 sub-items analyzed. The accumulated price increase for this good was 45% until December 2023.

“Many cars entered Brazil in the last 30 years”, says Imaizumi, indicating that the increase in supply may have slowed the inflation of used cars.

The devaluation of these vehicles over time also contributed to the less intense variation in prices, adds the economist.

On the side of the smallest increases in the ranking, other highlights are motorcycles (132%), new cars (133%) and registration and license (199%).

See changes in the IPCA basket

Released by IBGE (Brazilian Institute of Geography and Statistics), the IPCA is the country’s official inflation index. The indicator serves as a reference for the monetary policy of the BC (Central Bank).

Since January 2020, 377 products and services form the list of sub-items researched in the IPCA. This relationship is changed from time to time by IBGE due to changes in the population’s consumption pattern.

The institute adapts the IPCA basket of products and services based on the results of the POF (Family Budget Survey).

POF points out what families buy and the weight of each expense in the budget. The most recent data from this research is from 2017 and 2018.

In the last update of the IPCA basket, which came into force in 2020, IBGE started to measure the evolution of prices for sub-items such as streaming and app transport. These are services from platforms such as Netflix, Uber and 99, which have gained space in families’ daily lives.

On the other hand, the 2020 update removed sub-items such as CDs, DVDs and cameras from the inflation calculation, which lost share in Brazilians’ budgets.

The most recent update also incorporated quickly prepared foods, such as instant noodles and powdered juice, into the IPCA.

Other examples that became part of the calculation were services related to aesthetics, such as eyebrows. In the pet wave, the IBGE added, also in 2020, the variation in prices for hygiene and treatment services for domestic animals.

In July 1994, when the real began to circulate, the IPCA basket had products and services such as cassette players for vehicles and shoe repair.

Five years later, in August 1999, IBGE updated the list, which now includes sub-items such as health plan, personal computer and cable TV.

The IPCA basket also underwent changes in July 2006 and January 2012. Then, there was the January 2020 update.