Friday, September 10, 2010
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General Price Indicies in Brazil

Brazil’s General Price Indicies monitored at the Getulio Vargas Foundation have first been published in November 1947 which the debut of the Economy Affairs Magazine.

Since then the indicies record the changes in prices of raw agricultural and industrial products and intermediate and final goods and services.

There are three different inflation indicies:

  • General Price Index (Índice Geral de Preços – 10 (IGP-10)
  • General Market Price Index (Índice Geral de Preços do Mercado (IGP-M)
  • General Price Index Domestic Supply (Índice Geral de Preços – Disponibilidade Interna (IGP-DI))

The difference between the three indicies is the timeframe in which the information to calculate the index is collected. The collected prices of each period are compared to those prices from the previous period.

brazil price indicies
Mes Anterior: Previous month
Mes de Referencia: Current month
Source: FGV

The IPG-10 Index measures the prices in the period of the 11th of the past month to the 10th of the present month. The index has first been collected in 1993.

The IPG-M index measures prices in the period of the 21th of the previous month to the 20th of the present month. The index has been introduced in 1989.

The IPG-DI index compares prices from the first to the last day of the present month and was first measured in 1944.

The IPG-M, different from the other two indicies, is based on a system of previously released tabulations before the month’s end. The tabulations represent partial results of the index based on information collected in 10 days.

The first preview of the index, measured from the first 10 days, calculates the price variations in the period of the 21st to the 30th of the past month to the present month. The second preview of the index expands this time frame to  the period from the 21st of the past month to the 10th of the present month.
The third and last preview of the index is the correct IPG-M.

‘Don’t Give Up’ on Emerging-Market Stocks, Credit Suisse Says

June 15 (Bloomberg) — Emerging-market stocks may rebound as long as the peak in the Organization of Economic Cooperation and Development’s leading indicator isn’t followed by another global recession, Credit Suisse Group AG said.

Developing-nation stocks have historically advanced an average 22 percent in the 12 months after highs in the indicator followed by so-called soft landings, said Credit Suisse analysts led by Sakthi Siva, the top-ranked Asia strategist in Institutional Investor’s 2010 poll. Russian, South Korean and Chinese stocks traded in Hong Kong are their top picks.

The OECD, founded in 1961 from the organization formed to administer Marshall Plan aid after World War II, said on June 11 that “tentative signs of a potential peak have appeared.” Its composite leading indicator increased 10.2 percent in March from a year earlier before slowing to 9.7 percent in April, according to Credit Suisse figures.

“Don’t give up,” the strategists wrote. “Global emerging markets and Asia excluding Japan valuations are now more attractive than at prior peaks in the OECD composite leading indicator. We also highlight that consensus earnings-per-share revisions continue to be positive.”

The MSCI Emerging Markets Index has dropped 11 percent from this year’s high of 1,047.51 set on April 15 amid a spread in Europe’s sovereign debt crisis and as China imposes curbs on property speculation that may cool the nation’s economy. The gauge is valued at about 11.9 times estimated earnings, down from 16.6 times at the start of the year.

‘Soft Landing’

The risk of a “double dip” is low given that it has only occurred once in the past 90 years, the brokerage said, citing analysis by Credit Suisse’s chief global equity strategist Andrew Garthwaite. Other economic data including the European Purchasing Managers Index and Germany’s Ifo business expectations gauge “are also consistent with a soft landing,” according to the report.

Russia is the third-most undervalued stock market among developing nations, based on a model that values companies’ net assets and return on equity, the strategists said. South Korea is ranked fifth lowest, while China’s H shares are seventh lowest.

The brokerage also recently reduced its “overweight” in Indonesia.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

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