Consumption of new technologies helps keep inflation low

The change in the habit of household consumption caused by the popularization of transport and purchasing applications in general is contributing to a more favorable behavior of service prices in the country and helping to keep inflation lower. The main consequences of incorporating applications into daily consumption are increased competition in various sectors and the possibility of comparing values, which leads to a downward trend in prices. The benefits of this technological wave are evident in service inflation: in 2019, it marked 3.5%, below overall inflation, which stood at 4.31%. In the accumulated 12 months ended January, the IPCA stood at 4.19%, while service inflation reached 3.3%. By the end of 2020, even with the expectation of accelerating economic activity, service inflation should continue behaved: between 3.5% and 4.6%, according to analysts consulted by G1. Service inflation has always been an obstacle to the Brazilian economy because, historically, it has rread above the Broad National Consumer Price Index (IPCA), considered the official inflation of Brazil. In the calculation of services enter, for example, expenses with personal care, such as manicure, expenses with hotels, transportation and food outside the home, among others. In the most advanced economies, the impact of technology on inflation has been called the "Amazon effect". The technology giant became a symbol of this movement because it created a product distribution model that reduced operating costs and, consequently, prices – and which came to be copied worldwide. "The second is the competition itself. New competitors sometimes arrive with more aggressive pricing policies," he adds. The effects of the impact of inflation technology should begin to become more evident in the forthcoming IPCA disclosures. With the changes in consumer behavior pointed out in the Family BudgetSurvey (POF) 2017-2018, the Brazilian Institute of Geography and Statistics (IBGE) changed the list of items that will be determined to calculate inflation. Items that fell into disuse and whose weight was lower in the families' budget, such as DVD machines, cameras, microwaves and blenders, are out of account; and services and products that have gained importance in the last decade, such as transportation by streaming applications and services, for example. "What models show is that service inflation should be very low in 2020, also at 3.5%. GDP is accelerating, has some resumption of activity, but inflation continues at a behaved pace and perhaps this is not just the level of employment," says Marcela. New habits A survey conducted by the Regional Center for Studies for the Development of the Information Society (Cetic.br) reveals as well as how technology has changed the brazilian's consumption habit. In 2018, according to Cetic.br, 70% of Brazilians (126.9 million people) used the Internet. Of these, 60% conducted some type of price survey, 34% bought or ordered products or services, and 19% disclosed or sold products or services. The study also showed that 32% of internet users asked for taxis or drivers for apps. In addition to transportation applications, other services were performed online: 28% paid for film or serial services over the Internet; 12% ordered meals on websites or apps; 8% paid for music services over the internet 5% made reservations of rooms or accommodations over the internet on websites and apps After the Moema station, from The Subway, was inaugurated, designer Celso Soares, 30, decided to sell the car in 2018. To get around in São Paulo, he started using an application that shows public transport routes. "I'm from Brasilia and there most people use cars. Before, until the inauguration of the Metro station next to my house, I did not have the habit of using public transport", he says. Celso has not yet made the accounts of how much saved from the exchange of the car for public transport, but remembers that he did not have expenses with parking and gasoline. Service inflation, old problem Technological change helps explain only a part of the weakness of service inflation in the IPCA. Analysts also consider that the slow resumption of economic activity has been responsible for the behavior of this price group. "Service inflation is lower because the product [economy] is not growing close to its potential," says Itaú's Júlia Passabom. Service inflation often responds to the performance of the economy. If activity accelerates and the unemployment rate falls, service prices tend to rise. The opposite also occurs: if there is an increase in unemployment, the costs of services tend to slow down, since there are fewer people willing to consume. In the quarter ended In February, unemployment was still high. This dynamic occurs because, when the economy is heated, there is more scope for the price transfer. "We don't see pressure on inflation from economic activity," says Lais Carvalho, an economist at Santander bank. "The recovery of the economy was already gradual, and it tends to be even more," he said. For years, the Brazilian economy has dealt with a very high service inflation. In 2011, for example, it rose 9.6%. At that time, the Brazilian economy still maintained a certain pace of growth and the country had full employment. Over the past few years, service inflation has only declined in 2017, when it ended the year at 4.5%. In 2019, the IPCA rose 4.31% and was above the center of the target, influenced by the high price of meat. This year, the projection of the Central Bank's Focus report indicates that inflation is expected to end the year at 3.25%.