Price increases linked to major sporting events are concentrated in a few categories, typically fade as tournaments end
Prices for lodging services, parking, and some food products may rise during major sporting events such as the FIFA World Cup and the Olympic Games, but the effects generally do not persist beyond the duration of the competitions, according to a study by Warren Investimentos.
According to Andréa Angelo, the firm’s inflation strategist, such events may add roughly 0.05 percentage point to Brazil’s headline inflation rate. Food prices account for 0.01 percentage point of the effect, while industrial goods and services each contribute about 0.02 percentage point.
“The impact exists, is statistically robust for certain items, and is consistent with the temporary increase in demand associated with tournaments. Even so, it is diluted within the aggregate index and does not have a permanent nature, suggesting that the effects on Brazilian inflation tend to be limited to the period of the event,” the study said.
To reach its conclusions, Angelo analyzed the behavior of items included in Brazil’s Extended Consumer Price Index (IPCA) during FIFA World Cups and Olympic Games held since 2010. Using statistical models, she calculated coefficients measuring each item’s sensitivity to major sporting events, their effect on prices, and their contribution to the IPCA.
The analysis identified statistical correlations between the events and price increases in 16 components of Brazil’s official inflation index. However, the overall impact on inflation was found to be small and temporary.
According to the study, some food products are among the items that tend to post the largest price increases during major sporting events. Bell peppers showed an estimated impact of 7.6 percentage points on prices, followed by cilantro at 5.1 percentage points and guava at 4.2 percentage points.
Angelo noted that although these products stand out statistically, it is difficult to find a logical explanation for why their prices would rise during such events. Despite the increases, these items carry very little weight in household consumption baskets and have virtually no effect on the IPCA, according to the study.
Among the most sensitive items, only lodging services—showing an estimated impact of 4.2 percentage points—have a measurable effect on inflation, contributing around 0.02 percentage point to the index. According to the economist, this category may be influenced by travel undertaken to visit friends and relatives to celebrate or watch matches together.
The survey also identified a second group of products with moderate sensitivity to major sporting events. This category consists primarily of industrial goods, including personal computers (0.89 percentage point), men’s underwear (0.74 percentage point), and jewelry (0.71 percentage point).
Some of these findings have more intuitive explanations. Parking services (0.60 percentage point), for example, tend to experience stronger demand as more people travel to watch games. Meanwhile, products such as fruit juice (0.49 percentage point) and cookies (0.45 percentage point) may reflect increased consumption by fans during tournaments.
Angelo emphasized that sporting events can influence price movements, but not enough to materially affect inflation trends or generate a meaningful impact on the IPCA.
She also acknowledged that the vacation season often coincides with the timing of major competitions and may influence some of the results, particularly in categories such as lodging, where demand typically increases. Nonetheless, she argued that there are no other significant factors capable of fully explaining the patterns identified in the study.
*By Grace Vasconcelos — São Paulo
Source: Valor International
https://valorinternational.globo.com/