IGP-DI Inflation Surges to 1.0% in February, Driven by Wholesale and Retail Price Pressures

The General Price Index – Internal Availability (IGP-DI) recorded a sharp increase of 1.0% in February, following a modest rise of 0.11% in January, according to data released by the Getulio Vargas Foundation (FGV) this Monday. The surge was driven by intense price pressures in both wholesale and retail markets.

Although slightly below the 1.15% increase forecasted in a Reuters poll, the IGP-DI's 12-month cumulative rise reached 8.78%, highlighting inflationary pressures across multiple sectors.

Wholesale Prices Under Pressure

The Broad Producer Price Index (IPA-DI), which accounts for 60% of the overall IGP-DI, climbed 1.03% in February, a notable jump from the 0.03% increase in January.

"The main factors driving producer prices were eggs and corn, both affected by high demand and limited availability in February. Additionally, logistical challenges have further pressured corn prices, potentially impacting other food supply chains, particularly animal protein," explained Matheus Dias, an economist at FGV IBRE.

Egg prices skyrocketed by 33.86% in February, reversing a 2.05% drop in January, while corn prices rose 4.80% after a 1.66% decline in the previous month.

Consumers Feel the Heat

The Consumer Price Index (IPC), which makes up 30% of the IGP-DI, reflected growing consumer price pressures, accelerating to 1.18% in February from 0.02% in January.

A key driver of this increase was the end of the Itaipu energy tariff discount, which accounted for nearly 50% of consumer price inflation in February.

Housing costs saw a dramatic shift, rising 3.80% in February after a 2.43% decline in January. Residential electricity tariffs alone surged 17.68%, following a 13.58% drop in the previous month.

Construction Costs Show Signs of Relief

In contrast, the National Construction Cost Index (INCC) showed a slowdown, rising 0.40% in February compared to 0.83% in January.

The IGP-DI measures price variations for producers, consumers, and the construction sector between the first and last day of the reference month. The latest data underscores persistent inflationary pressures, particularly in key consumer goods and energy sectors, signaling potential economic challenges ahead.