General Price Index

The IGP (General Price Index) was conceived in the 1940s as a comprehensive measure of price movement that covered not only not only different activities, but also distinctive steps in the production process. Built in this way, the IGP could be used as a deflator of the business activity index, which would produce a monthly indicator of economic activity.

IGP is the arithmetic weighted average of three different price indexes:

• Wholesale Price Index (IPA)
• Consumer Price Index (IPC)
• National Construction Cost Index (INCC)

The weights of each component index corresponds to the gross domestic expenditures’ shares in the national accounts:

• 60% for IPA
• 30% for IPC
• 10% for INCC,

The IGP has three functions:

1. It is a macroeconomic indicator that represents price level progression
2. It operates as a deflator of nominal values with coverage that is compatible to its composition, such as tax revenue or intermediate consumption in the national accounts.
3. It is used as a reference for updating contract prices and values.

Three versions are available: the General Price Index-10 (IGP-10), the General Market Price Index (IGP-M), and the General Price Index-Internal Availability (IGP-DI). The difference between them is the time period in which information is collected for calculating the index (see chart). Prices collected during each period are compared to those prevailing 30 days before. IGP-DI is an index of the debts owed by states to the Federation, and IGP-M is used to correct, along with other parameters, electric power supply contracts.