Producer Prices

Industry inflation decelerates to 0.61% in June, even with high in ethanol and petroleum prices

Section: Economic Statistics | Cristiane Crelier

July 31, 2020 09h00 AM | Last Updated: July 31, 2020 03h20 PM

Petroleum refining and ethanol products had a 17% high in June - Photo: André Motta de Souza/Petrobras

Industry prices rose 0.61% in June over the previous month, with the main impact coming from the activities related to petroleum derivatives and biofuels (17.07%). Despite the rise, there was deceleration in relation to May result (1.16%), which had been the highest since the beginning of May 2019 (1.39%). Even so, it is the eleventh consecutive increase of the indicator, which measures the change in "factory-gate prices", without tax or freight, of 24 activities of the mining/quarrying and manufacturing industries.

The data are from the Producer Price Index - IPP, released today (31) by the IBGE. In the year, the indicator accumulates a 3.94% increase up to June. In the last 12 months, the industry inflation was of 6.38%.

Opposed to what had been going on in the last few months, food, which has the main weight in the general index (nearly one fourth of the indicator) and accumulates high of 17.38% in the year, recorded a negative change, -0.79%. In addition, less than half (11) of the 24 activities surveys had a positive change. It was petroleum refining and ethanol products that took the IPP to the positive sphere.

"Price in this activity is very much linked to the one practiced in the international market of Crude petroleum oil. With the pandemic of Covid-19, the entire world reduced the consumption of fuels, but the production moved on, which ended up generating a surplus and causing prices to decrease. Even with the high of 17.07% in June, the sector prices still accrue a drop of 25.37% it the year", emphasizes IPP manager Manuel Campos Souza Neto.

Other highlights from May to June were tobacco (-6.08%), footwear and leather articles (-5.82%) and Other Transportation Equipment (-4.25%). The most influential sectors were: petroleum refining and ethanol products (1.12 pp) and food products (-0.20 pp), basic metals (0.21 pp), with decrease of 3.21%,  and mining and quarrying industries (0.17 pp), with a 3.75% high.