São Paulo, January 7, 2004 (Agência Brasil - ABr) - The Cost of Living Index (ICV) in the capital of São Paulo was 9.55% in 2003, according to a calculation made by the Dieese (Inter-Union Department of Statistics and Socio-Economic Studies). The rate in 2003 is less than it was in 2002 (12.93%).

According to the coordinator of the study, Cornélia Nogueira Porto, the largest increases registered last year were for services, such as telephone service, water, electricity, and schools. Contractual readjustments were the origin of the increases. "These contractual readjustments are based on past inflation. Since inflation in 2002 was rather high, the result was a big increase in this type of service," Porto explained. Consequently, the products that rose greatly in 2002 contributed to a drop in inflation in 2003.

Health (15.16%) was responsible for part of the inflationary pressure, due to increases in the prices of remedies and health plans. "Health insurance and health coverage, which were readjusted as a result of changes in the legislation, suffered increases of around 19%, a rate which is much higher than a level of inflation under 10%," she affirmed.

Food, for its part, rose less than inflation, which, according to Porto, occurred because the food group underwent significant increases in 2002. "Since the increases were great in 2002, there was no need to raise prices in 2003," she said.

The expectation for 2004 is for an increase of 5-6%, as long as the economy continues on its present course. In the coordinator's assessment, the dollar should remain stable and should not exert any pressure on the prices of goods and services. (DAS)