Inflation was lower for families with retirees – 03/20/2023 – Market

Pensioners’ inflation was below the official consumer price index in February, but remains above the general indicator in the accumulated 12 months.

In February, the IPCA Retirees —calculated by the Instituto de Longevidade MAG— increased by 0.68% compared to the previous month. The index is based on the same variation of the items that make up the IPCA (Extended Consumer Price Index), calculated by the IBGE, which showed an increase of 0.84% ​​last month.

The difference is that weighting is done for each product and service based on the consumption basket for households with at least one person receiving retirement or pension —from the INSS, the public service or supplementary pension, considering data from the survey of IBGE family budget.

In February, the price group that rose the most was education, up 6.28%, the highest rate since February 2004. This is an item that weighs less in the basket of families included in the Retired IPCA. Therefore, the inflation of this group of people was lower.

In the last 12 months, however, the inflation of retirees has accumulated a high of 6.1%, above the 5.6% of the IPCA. The difference is mainly explained by the impact of the increase in food prices and expenses related to housing.

Consumption by families with retirees is relatively more focused on items such as health and food. Spending on transport, education and housing is proportionally lower.

Since July, inflation has affected these families the most. The closed data for 2022 showed, for example, that the inflation of retirees was 6.4%, surpassing the 5.93% readjustment given to INSS beneficiaries who earn amounts above the minimum wage.

Retirees who earn the minimum wage had a readjustment of 7.43%, which guaranteed a real increase. The government should promote a new readjustment of the minimum this year, from R$ 1,302 to R$ 1,320, starting May 1st.

Retirees represent an increasingly relevant portion of the Brazilian economy, but there was no price indicator specifically aimed at this population, according to economist Arnaldo Lima, director of the Instituto de Longevidade MAG, former secretary of the Ministry of Finance and former director from Funpresp (pension fund for federal employees).

He also developed an inflation indicator for households headed by people aged 50 or over. The IPCA 50+ or ​​”inflation of the oldest old” increased by 0.72% in February, also below the general IPCA. In this case, the contribution to the difference was spread across several items, including education and food.

In 12 months, the IPCA 50+ is at 6.2%, also above the IBGE number.

While the Brazilian population under 50 years of age has increased by 1% over the past ten years, the portion aged 50 or over has grown by 35%, according to Lima. He says that this public is more active in the job market and that family members are very financially dependent on these heads of household. This will require more savings and the use of a more adherent inflation index for pension planning purposes.

Other institutions also have specific indexes for older audiences, but with different scope and methodology. The IPC-3i, from FGV (Fundação Getulio Vargas), is based on price indices from the institution itself and considers families with at least half of the components aged 60 or over. Fipe makes calculations for the municipality of São Paulo also focused on the population in this age group.