The nature of services inflation in Brazil: 1999-2014

Abstract

This paper aims to shed light on the dynamics of Brazilian services inflation from 1999 to 2014. In order to do so, it first identifies all disaggregated components of the Brazilian consumer price index that can be characterized as services. These components are then translated into activities compatible with the Brazilian National Classification of Economic Activities. This translation allows the extraction of structural data (value added, occupations, wages, etc.) on the aforementioned services from several Brazilian databases - most notably the Annual Services Survey, the National Household Survey and administrative records of the Ministry of Labour. These new structural data corroborate preexisting views on the determinants of Brazilian services inflation, but they also add to them, suggesting that attention should be paid to a handful of sectors with exceptional rates of growth in value added and/or/ occupation and/or wages.

Keywords:
Services inflation; Baumol’s disease; Relative prices; Brazilian inflation; Wage-led growth