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IGPM x IPCA

Much is said about the readjustment indexes often applied in contractual relations, many of us have even conducted some legal business containing one of these indexes, however, little is known about them.

IGPM X IPCA

In this current global scenario faced with the Coronavirus pandemic, the discussions regarding the contractual readjustment indexes came to the surface, because many contractual readjustments occurred in this period, and with the high indexes, discussions were raised in front of the judiciary. Thus, it is necessary to understand a little better these indexes, both for application in professional and personal life.


General Market Price Index (IGP-M)

The famous IGP-M, has as its main objective to measure the price variation of the main sectors of the country's


ade economic activity in the country, taking into account the costs to the producer, consumer and construction. It also takes into account the price variation of goods and services, as well as the raw materials used in agricultural production, industry, and civil construction.


Composition of IGP-M

60% by the IPA (Broad Producer Price Index) - Price variation perceived by producers, such as agricultural and industrial goods.

30% on CPI (Consumer Price Index) - Variation that directly impacts the consumer of the final product.

10% on INCC (National Index of Construction Cost) - Variation in prices of construction materials and labor cost.


Broad Consumer Price Index (IPCA)

The IPCA has as its main objective to measure the variation of retail prices consumed by Brazilian families, it is related to the amounts that consumers pay when buying products. In this way, the IPCA measures the variation of prices from the producer, direct to the final consumer.


Form of Calculation of the IPCA

To calculate the IPCA, the price of more than 400 retail products and services consumed by families with monthly incomes between 1 and 40 minimum wages is evaluated. The group of food, beverages, housing, household goods, clothing, transportation, health, personal care, personal expenses, education, and communication are evaluated. The price variation of these products in several cities in Brazil is evaluated, then a weighted average of the results is made, and the IPCA is finally calculated.


What is the reason for the discharge of IGPM?

One of the main reasons for the high IGPM is due to the exchange rate, with this period of pandemic, there was a devaluation of the real, the commodities of the industrial sector (iron, copper, aluminum, corn, soybeans, wheat) quoted in dollars increased a lot, pushing the IGPM up. Considering that the IGP-M takes into account the national accounts, with the high value of the dollar, the value of raw materials rises, the purchase value rises, thus the IGPM has its high.

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