Rent inflation slowdown is expected in 2022, says economist

THE General Price Index – Market (IGP-M) known as “rent inflation”, increased 0.87% in December and reached a high of 17.78%, according to the Getúlio Vargas Foundation (FGV). in interview to CNN, the economist at FGV, André Braz stated that the deceleration in the rise in the index is expected to continue in 2022.

“For next year, we expect the IGP-M to rise much less. We are going to exchange very high rates that were in effect earlier this year for lower rates early next year. This will cause the index, which remains high, to retreat,” he said.

The economist explained that, although there is still an increase in the readjustment, it is much smaller than that registered in the first half of 2021, when the pandemic was at its peak and, thus, directly affected many sectors of the economy.

“In May of this year, he [o IGP-M] reached a high of 37%. So, despite remaining very high, the index has already decelerated by almost 20 percentage points. This deceleration trend will continue in the first quarter of next year”, he stated.

Braz also pointed out that in 2022 rent inflation is expected to match the main inflation rate in the country. “The expectation is that by May of next year the IPG-M will come very close to the IPCA, as it was before the effects of the pandemic affected prices,” he declared.

The FGV economist said that rent inflation rose in December this year due to increases in energy and food.

“The water crisis also harmed the electricity sector a lot and energy generation became much more expensive. This materialized in a strong price increase that affected both the industry and the provision of services. With these very high costs, the index [IGP-M] it went up a lot”, he affirmed.

“We also estimate a price increase, albeit smaller, for foodstuffs in 2022. This year, foodstuffs close around 8%, and next year they may close around 4%,” he added.