Rise in food prices drove up IGP-M, says FGV.

The change in trajectory of retail food prices (from -0,13% to 0,85%) led to an increase in the second preliminary reading of the General Price Index - Market (IGP-M), which jumped from 0,33% to 0,52% from August to September, as announced earlier by the Getúlio Vargas Foundation (FGV). According to the coordinator of Economic Analysis at the entity, Salomão Quadros, although retail represents 30% of the total inflation calculated by the IGPs (while wholesale accounts for 60%), the surge in prices perceived by consumers was so strong (from 0,08% to 0.52%) that it ended up guiding the increase in the rate of the second preliminary reading.

In retail, price increases were observed in both fresh and processed foods. Quadros commented that the price increases were widespread across different food categories in the retail sector in the second preliminary reading for September. As examples, the expert cited price accelerations in vegetables (from 2,18% to 6,12%) and dairy products (from 0,65% to 1,16%), from the second preliminary reading in August to the same reading in September.

Quadros explained that, in practice, what is currently happening with food at the retail level is the passing on of price increases recorded in more processed foods at the wholesale level. However, this pass-through occurs with a time lag; currently, the prices of agricultural items are no longer rising as sharply. In fact, inflation for processed foods at the wholesale level slowed from 3.07% to 1,25% from the second preliminary reading in August to the same preliminary reading in September.

Raw agricultural commodities also slowed down at the wholesale level (from 1,61% to 1.45%) during the same period. "What we are seeing today is a divergence between what is happening with agricultural products at the wholesale level and food at the retail level," he summarized. However, he reiterated that price increases from the wholesale level to the retail level are not always passed on immediately.