The rise of the dollar and the growing demand for commodities led to a significant increase in the General Market Price Index (IGP-M), an index calculated by the Brazilian Institute of Economics (Ibre) of Getulio Vargas Foundation (FGV). Although the Brazilian Lease Law does not determine which index should be used for adjust the lease agreements rental, IGP-M is traditionally used.

This significant increase in the IGP-M has triggered several discussions about the rightness of its application in lease relations and led tenants and landlords to negotiate the adoption of other indices, such as the Amplified Consumer Price Index (IPCA) – calculated by the Brazilian Institute of Geography and Statistics (IBGE) to "measure the inflation of a set of products and services in the retail market, referring to the personal consumption of families".

The IGP-M is measured monthly and seeks to stipulate the "variation in the prices of goods and services, as well as raw materials used in agricultural, industrial and construction production". It results from a weighted arithmetic average of three other indices:

  • 60% of the Wholesale Price Index (IPA-M), which records the variation in prices in inter-business transactions between agricultural and industrial producers, such as commodities, and is especially impacted by the exchange rate;
  • 30% of the Consumer Price Index (IPC-M), which registers the daily price variation of a fixed set of goods and services, reflecting the oscillations on the purchasing power of families; and
  • 10% of the National Construction Cost Index (INCC-M), which measures the evolution of housing construction costs and is also impacted by the price of commodities, such as steel and cement.

Choosing IGP-M as an index for calculating the annual adjustment of rent values goes back to the hyperinflation period – before the Plano Real was implemented. At the time, the controlled exchange rate was adopted and the linking of the IGP-M to the exchange rate variation prevented the value of rents from being eroded.

The option for the IGP-M is also related to the fact that its disclosure is made in a cumulative and periodic manner in three distinct moments: previous projections of the first and second periods of ten days and final index. The first disclosure is based on information from the period from the 21st to the 30th day of the month preceding the reference month, while the second comprises the period of 21st day of the prior month and the 10th day of the reference month. The third disclosure is the value of the final index. Thus, the way of disclosure of the index offers another advantage: the assurance of greater predictability and transparency for contractors.

With the adoption of the Plano Real in 1994, the IGP-M and the IPCA began to reach similar levels, so that there were no risks to the maintenance to keep the IGP-M as the readjustment index of rental leases. However, when the variable exchange rates took place in 1999, the IGP-M index grown up fast, becoming, in general, higher than IPCA. Although, at times, the IGP-M reaches annual variations lower than the IPCA – including negative variations, such as in 2017, the year in which the IGP-M was -0.52%, while the IPCA was calculated at 2.95% – this change occurs in periods of a drop in the parameters used to calculate the IGP-M – negative exchange rate and/or reduction in commodities prices – which do not directly affect the calculation of the IPCA.

The calculation of the IGP-M is directly affected by the situation of the foreign market. Currently, with the rise in the price of the dollar, tied to the increase in demands for commodities there was a significant increasing in the IPA-M and, consequently, in the IGP-M (until July 2021 it accumulate over than 36.8% in the last 12 months). On the other hand, the IPCA reached the level of 9.38% during the same period.

Considering the current scenario, five bills of law (PL) were filed in the House of Representatives trying to solve the crisis. They are:

  • PL no. 1,255/21, authored by congresswoman Renata Abreu (Podemos/SP), which aims to establish the maximum adjustment not superior to twice the annual IPCA;
  • PL no. 1,447/21, authored by the congressman Aureo Ribeiro (Solidariedade/RJ), which intends to determine the IPCA as an index of adjustment for all lease agreements of urban properties, allowing the adoption of other lower indexes, except if a superior is expressly approved by the tenant, also prohibiting the adjustment until 12/31/2022;
  • PL no. 1,538/21, authored by the congressman Carlos Veras (PT/PE), who aims to create a specific law establishing the IPCA as an index for residential leases of urban and non-residential property, provided that tenants are classified as micro-enterprises, small-sized companies, individual entrepreneurs or liberal professionals, including the possibility of judicialization review of the contractual for whose adjustment, as of March/2020,has occurred by the IGP-M;
  • PL no. 2,554/21, authored by the congressman Cleber Verde (Republicanos/MA), to determine that the adjustment index cannot be higher than the arithmetic average obtained between the IGP-M and the IPCA; and
  • PL no. 1,026/21, authored by the congressman Vinícius Carvalho (Republicanos/SP), which proposes that the adjustment index may not be higher than the IPCA, unless the collection of higher value is expressly authorized by the tenant.

Currently, the projects are attached to Bill of Law No. 1,026/21, which is being processed as a matter of urgency and awaits for the vote in the plenary of the House of Representatives. The projects received, on 06/14/2021, the opinion of the Constitution and Justice and Citizenship Commission, which, despite "recognizing good intention", voted to reject all of them, understanding that the effects resulting from the approval would be contrary to those intended.

In addition to the initiative in the House of Representatives, the Social Democratic Party (PSD) filed, on 07/21/2021, the Argument for Breach of Fundamental Precept (ADPF) No. 869. The ADPF intends that, according to the interpretation of Article 317 of the Civil Code and Articles 17 and 18 of the Brazilian Lease Law based on the Constitution, the adjustment of residential or non-residential lease contracts should occur through the application of the IPCA, replacing the IGP-M, even if contractually chosen. In a supplementary manner, the ADPF requires the application of the IPCA to readjust residential and non-residential lease contracts during the coronavirus pandemic, claiming the constitutional illegitimacy of the set of decisions that determines the application of the contractually established IGP-M.

On 08/19/2021, the Office of the General Counsel for the Federal Government expressed opposition to the request, arguing that the violation of the constitutional precepts indicated– Article 317 of the Civil Code and Articles 17 and 18 of the Brazilian Lease Law – was not demonstrated.

Regarding the decisions within the courts of justice, there is no peaceful understanding. There are favorable decision to non-judicial intervention in relations between private entities, as well as decisions determining the replacement of the rental readjustment index to ensure the balance between the contractual parties.

Considering the absence of a peaceful position in the courts and that the measures suggested by the Legislative and Executive have not yet been appreciated, the best way to solve the crisis generated by the application of IGP-M in lease agreements remains the negotiation between landlord and tenant.



RIMOLI, Flavius Tambellini. The discharge of the IGP-M and the intervention of the Judiciary. Crumbs, July 27, 2021. Available in: <>.

MAGRI, Diogo. IGP-M explosion brings disproportionate increase in rent and reveals index that has aged. The country, April 15, 2021. Available in: <>.

CARNEIRO, Luiz Orlando. PSD requires the Supreme Court application of the IPCA in lease agreements. JOTA, July 21, 2021. Available in: <>.

MENDES, Jaqueline. The disproportionate strength of the IGP-M. That is, August 13, 2021. Available in: <>.

IGP-M: Results 2021. Getúlio Vargas Foundation, January 4, 2021. Available in: <>.

IPCA - Broad National Consumer Price Index. Brazilian Institute of Geography and Statistics. Available in: <>

General Price Index - Market (IGP-M). Value Consulting. Available in: <>