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Industry inflation falls again and stands at -1.96% in September

Section: Economic Statistics | Caio Belandi

October 26, 2022 09h00 AM | Last Updated: October 27, 2022 01h10 PM

Petroleum industrial chain was the main influence for new factory-gate price drop - Photo:André Valentim/Agência Petrobras

Prices in the industrial sector fell 1.96% from August to September 2022, the second biggest drop since the beginning of the time series, which began in 2014. The previous index, from July to August, had registered a record drop (-3, 04%). As a result, industry accumulates deflation of 4.94% in the last two months.

In the last 12 months, the rate was 9.76%, while in the year, the indicator is 5.87%. The data are from the Producer Price Index (IPP), released today (Oct 26) by the IBGE, which measures "factory-gate" prices of products, that is, prices excluding taxes and freight, and covers the major economic categories: capital goods, intermediate goods and consumer goods (durable, semi-durable and non-durable).

Felipe Câmara, research analyst, points out that the last time there was a two-month sequence of negative results was more than three years ago. “We are facing a continuous movement, with the determinants of reductions in the general level of prices exerting influence over a period that extends to more than a single point in the series. In terms of historical perspective, the last time there were two consecutive months of IPP retraction was in June/July 2019,” he explains.

Once again, the highlight was the Petroleum refining and biofuels industry, the biggest change (-6.79%) and the biggest influence (-0.89 percentage points) in the general industry. Other highlighted activities were food, with -0.27 pp of influence, basic metals (-0.24 pp) and Other chemical products, down 6.20% in the month, corresponding to -0.62 pp of influence. "There is a leading role in the petroleum-derived chain in this month's index", points out Mr. Câmara.

The prices of the Petroleum refining and biofuels sector changed on average, from August to September, -6.79%, a rate close to the previous month, -6.99%. As a result, the cumulative index for the year, which was 26.49% in August, dropped to 17.90% (against 49.70% in September 2021). Finally, in the September 2022/September 2021 comparison, current prices are 33.64% higher, the lowest rate since February 2021 (18.25%).

Among the major economic categories, intermediate goods (-2.42%) and consumer goods (-1.66%) had a retraction in prices, being 0.19% in durable consumer goods and -2.01% in semi-durable and non-durable consumer goods. The first appears as the main influence, accounting for -1.42 pp of the change of the industry in the month of September. Repeating the combination verified in August (both with negative changes), intermediate goods and semi-durable and non-durable consumer goods dictate the sign and magnitude of the IPP result, as together, they represent approximately 87% of the weight in the calculation of the General Index.

More about the survey

The IPP tracks the average change in sales prices received by domestic producers of goods and services, and their evolution over time, signaling short-term inflationary trends in the country. It is an essential indicator for macroeconomic monitoring and a valuable analytical tool for decision makers, either public or private.

The survey investigates, in just over 2,100 enterprises, the prices received by producers, exempt from taxes, tariffs and freights and defined according to the most usual commercial practices. About 6 thousand prices are collected monthly. The complete IPP tables are available on Sidra.

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