Producer Prices
Industry inflation accelerates in May due to rise of food prices
July 01, 2020 09h00 AM | Last Updated: July 01, 2020 12h30 PM
Industry prices rose 1.22% in May against the previous month, the highest figure since May 2019, when the index reached 1.39%, as reported by the IBGE's Producer Price Index (IPP), released today (1). That is the tenth consecutive increase of the indicator, which measures the evolution of prices at "factory gate", without taxes or freight, for 24 activities of mining and quarrying and manufacturing industries. With the result of May, the cumulative index in the year hit 3.37%. inflation for the last 12 months is of 4.60%.
The survey manager, Alexandre Brandão, says that the deceleration of fall of petroleum prices and the rise of food products were the most influential factors to the May index. “In April, there was a very significant decrease in oil refining (-20.61%) and that continued in May, though less significant (-5.78%), whereas the other sectors did not record between the two months. Food products, the most important sector, had previously registered a price rise, and now, once more. These two movements led the index to a level of 1.22%.”. In April, the general index was of 0.11%.
Food prices, which account for most of the IPP (25.99%), rose 2.47% in May against the previous month. In May, the sector was responsible for 0.60 percentage points of the overall index of industry prices. The researcher considers the rise in the food sector still influenced by the depreciation of real against the dollar. “In May, our currency depreciated 6%, less than in previous months, but these cumulative figures have an impact on product prices, as they are directed to exports.”
The most influential products in the food sector were fresh or cooled beef, VHP sugar and residue from soybean extraction, which recorded significant changes in the month. The fall of prices of frozen poultry meat or giblets, the fourth most influential product in the sector, was to due internal factors such as the rise of unemployment and the subsequent trend to decrease in demand for that type of meat.
Besides food products and oil refining and alcohol products, other influential sectors were mining and quarrying industry and motor vehicles. In May, 16 of the 24 activities recorded positive price changes. the most significant ones came from: mining and quarrying industry (9.13%), oil refining and ethanol products (-5.78%), other transportation equipment (4.57%) and textiles (4.36%).
