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Inflation in industry slows down to 0.40% in September

Section: Economic Statistics | Umberlândia Cabral

October 27, 2021 09h00 AM | Last Updated: October 28, 2021 12h35 PM

The greatest impact on the general index came from mining and quarrying, which dropped 16.48% in September - Photo: Xusenru/Pixabay

Industry prices rose 0.40% in September compared to the previous month. Despite the increase, it is a deceleration in relation to the result of August, when the rate was 1.89%. The biggest impact on the overall index came from minig and quarrying industries (-1.24 pp), whose prices fell 16.48% in the month. Data are from the Producer Price Index (IPP), released today (October 27) by the IBGE. With the result of September, the industry accumulates an increase of 24.08% in the year and of 30.59% in 12 months.

The survey measures the “factory gate” price changes, excluding taxes and freight, of 24 activities in the mining and quarrying and manufacturing industries. In September, 20 of these activities had positive changes compared to August.

“Although positive, the change in the general index in September was the lowest observed in 2021. The result is explained both by the increase in some activities, such as food, and by the fall in the sector of mining and quarrying industries. This was the second biggest drop in the time series of the activity and is due to the lower prices of iron ore, which is a product quoted on the international market and is being affected by the decrease in demand, mainly from China", explains the survey analyst Murilo Alvim.

The food sector (0.58 pp) exerted the second biggest influence on the overall result of September, rising 2.48% in the period. “This result was influenced by the higher prices of products such as beef, chicken and sugar. It is worth mentioning that these products are influenced by the dollar fluctuation, which posted increase this month of 0.5%”, says Mr. Alvim.

He highlights that the demand increase for chicken, consumed as an alternative to beef, also explains the high of the product. In the case of sugar, besides the increase of the dollar, the result is related to weather factors. “The high of sugar is mostly due to the sugarcane crop, which this year is being compromised by frosts and droughts in some regions of Brazil”, he says. For the third month in a row, prices of food went up and, as a result, accumulated a 15.42% increase in the year.

Conversely, other chemical products recorded inflation of 4.41%, the fourth consecutive positive rate. The manager explains that the result of this segment is related to international market prices of some raw-materials. “There was increase in the prices of fertilizers and pesticides, which are affected mainly by the highs in inputs and organic chemicals, especially unsaturated propene, also influenced by the international reference”, he adds.

Another highlight in September was the sector of petroleum refining and other ethanol products, which increased 1.82% over August. As a result, the sector accumulates a high of 49.69% in the year and of 64.33% in 12 months. “The activity is very related with the bigger prices of crude petroleum oil, responsible also for a great part of the cumulative index of the year of the mining and quarrying sector (40.72%). With the increase of crude oil, products such as gasoline and diesel fuel were directly affected. Besides, there is also the dollar high, which ends up increasing more the prices of those products”, explains Mr. Alvim.

According to the specialist, the increase of the prices of petroleum refining and other ethanol products is also due, to a great extent, to the problems faced by sugarcane crops. “As the crops are being threatened, the supply shrinks and, consequently, prices rise. Besides, there has been a greater demand for the product, which also makes prices go up”.

Basic metals, activity which changed 1.21% from August to September, accumulates high of 42.13% in the year. According to the analyst, the results of the sector are related to the steel groups and to non-ferrous materials (copper, gold and aluminum). “The higher prices of iron ores in the cumulative index of the year, despite the decrease in September, end up affecting the basic metal sector, as it is the sector that mostly uses the product as input”, he highlights

More about the IPP

The IPP aims at measuring the average change of sale prices received by the domestic producers of goods and services, as well as its evolution over time, signaling the short-term inflationary trends in Brazil. It is a key indicator for the macroeconomic follow up and, consequently, a valuable analytical instrument to decision takers, either public or private.

The survey investigates, in slightly more than 2,100 enterprises, the prices received by producers, free from tax, tariffs and freight, defined according the most usual commercial practices. Nearly 6 thousand prices are collected monthly. The complete tables with the results are available at Sidra..

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