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An R package to deflate nominal Brazilian Reais
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README.md

deflateBR

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deflateBR is an R package used to deflate nominal Brazilian Reais using several popular price indexes.

How does it work?

The deflateBR’s main function, deflate, requires three arguments to work: a numeric vector of nominal Reais (nominal_values); a Date vector of corresponding dates (nominal_dates); and a reference month in the MM/YYYY format (real_date), used to deflate the values. An example:

# Load the package
library(deflateBR)

# Deflate January 2000 reais
deflate(nominal_values = 100, nominal_dates = as.Date("2000-01-01"), real_date = "01/2018")
#> 
#> Downloading necessary data from IPEA's API
#> ...
#> [1] 310.3893

Behind the scenes, deflateBR requests data from IPEADATA’s API on one these five Brazilian price indexes: IPCA and INPC, maintained by IBGE; and IGP-M, IGP-DI, and IPC maintained by FGV/IBRE. To select one of the available price indexes, just provide one of the following options to the index = argument: ipca, igpm, igpdi, ipc, and inpc. In the following, the INPC index is used.

# Deflate January 2000 reais using the FGV/IBRE's INCP price index
deflate(100, as.Date("2000-01-01"), "01/2018", index = "inpc")
#> 
#> Downloading necessary data from IPEA's API
#> ...
#> [1] 318.1845

With the same syntax, a vector of nominal Reais can also be deflated, what is useful while working with data.frames:

# Create some data
df <- tibble::tibble(reais = seq(101, 200),
                     dates = seq.Date(from = as.Date("2001-01-01"), by = "month", length.out = 100)
                     )

# Reference date to deflate the nominal values
reference <- "01/2018"

# Deflate using IGP-DI
head(deflate(df$reais, df$dates, reference, "igpdi"))
#> 
#> Downloading necessary data from IPEA's API
#> ...
#> [1] 341.0412 342.7393 344.9315 345.5051 344.9379 346.6979

Working with the tidyverse

For tidyverse users, the deflate function can be easily used inside code chains:

library(tidyverse)

df %>%
  mutate(deflated_reais = deflate(reais, dates, reference, "ipca"))
#> 
#> Downloading necessary data from IPEA's API
#> ...
#> # A tibble: 100 x 3
#>    reais dates      deflated_reais
#>    <int> <date>              <dbl>
#>  1   101 2001-01-01           296.
#>  2   102 2001-02-01           297.
#>  3   103 2001-03-01           299.
#>  4   104 2001-04-01           300.
#>  5   105 2001-05-01           301.
#>  6   106 2001-06-01           303.
#>  7   107 2001-07-01           304.
#>  8   108 2001-08-01           303.
#>  9   109 2001-09-01           304.
#> 10   110 2001-10-01           306.
#> # ... with 90 more rows

Convenience functions

To facilitate the task of deflating nominal Reais, the deflateBR package also provides five convenience functions: ipca, inpc, igpm, igpdi, and ipc. Each one of these functions deflate nominal values using their corresponding price indexes. For instance, to deflate nominal Reais using IGP-M, one can execute the following code:

igpm(100, as.Date("2000-01-01"), "01/2018")

Or, using the IPCA index:

ipca(100, as.Date("2000-01-01"), "01/2018")

In addition, the deflateBR package contains a function called inflation that calculates the inflation rate between two dates quickly. Providing initial and end dates in the MM/YYYY format, plus one price index, the function returns the inflation rate in percent:

# Inflation rate between January and December of 2017
inflation("01/2017", "12/2017", "ipca")
#> 
#> Downloading necessary data from IPEA's API
#> ...
#> [1] 2.947421

Installing

Install the latest released version from CRAN with:

install.packages("deflateBR")

To install the development version of the package, use:

if (!require("devtools")) install.packages("devtools")
devtools::install_github("meirelesff/deflateBR")

Methodology

Following standard practice, seconded by the Brazilian Central Bank, the deflateBR adjusts for inflation by multiplying nominal Reais by the ratio between the original and the reference price indexes. For example, to adjust 100 reais of January 2018, with IPCA index of 4916.46, to August 2018, with IPCA of 5056.56 in the previous month, we first calculate the ratio between the two indexes (e.g., 5056.56 / 4916.46 = 1.028496) and then multiply this value by 100 (e.g., 102.84 adjusted Reais). The deflate function gives exactly the same result:

deflate(100, as.Date("2018-01-01"), "08/2018", "ipca")
#> 
#> Downloading necessary data from IPEA's API
#> ...
#> [1] 102.8496

Citation

To cite deflateBR in publications, please use:

citation('deflateBR')

Author

Fernando Meireles

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