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Inflation in industry stands at -0.54% in November, fourth negative change

Section: Economic Statistics | Igor Ferreira

January 04, 2023 09h00 AM | Last Updated: January 07, 2023 12h30 AM

Chemical industry stood out with the highest change (-4.41%) and the main influence (-0.41 p.p.) on the result of November - Photo: Freepik

Prices of industry dropped 0.54% in November from October, fourth consecutive negative change of the Producer Price Index (IPP). In spite of th recent negative results, IPP has a cumulative increase of 4.47% in the year and, of 4.39%, in 12 months.

In November, nine of the 24 activities of industry surveyed recorded positive changes in price against the previous month, opposite to what as observed in the change of general industry. Information was released today (4) by the IBGE.

“This decrease is mainlu related to the prices of more relevant sectors in Brazilian industry, mainly food products and petroleum refining. In the case of food products, the participation of crops of some products and a lower demand in other cases account for most drops. As for petroleum refining, the main reason is the performance of crude oil, of the mining and quarrying sector in the foregign market,” says the IBGE manager of Analysis and Methodology, Alexandre Brandão.

The sector that stood out was chemical industry, with the highest change (-4.41%) and the main influence (-0.41 p.p.) on the November result.

“The main contribution to the fall of prices in chemical industry, in October and November, is related to the fall of prices of fertilizers. Brazil imports most of what it consumes, so the prices of goods produced here follow international prices and these, after rising after the beginning of the European conflict, started to drop, with some normalization of trade flows,” Mr. Brandão explains. 

Other activities that also accounted for a major impact on the result were food products (-0.17 p.p.), petroleum refining and biofuels (0.12 p.p.) and mining and quarrying industries (-0.08 p.p.).

Mining and quarrying industry, for the sixth consecutive months (and the seventh in the year), recorded negative changes against the immediately previous month, -1.65%. As a result, the cumulative index in the year stayed at -0.76%, first negative result in this analysis since April 2020 (-4.00%).

Considering the two most relevant products in tis sector, crude oil and iron ore, from October to November and cumulative in the year, changes went the opposite direction, as the former rose and the latter fell. As for the cumulative index in 12 months, the change in prices of iron ore remained negative, but crude oil is not among the four main products regarding influence.

In terms of refining, for the first time in the last four months, the change of prices was positive (1.01%, accounting for 0.12 p.p., out of the change of -0.54% in industry), in line with the rise of crude oil, whoso value in the domestic market followed the trend of the international market.

“As for food products, throughout 2021, there were significant rises in the prices of coffee and milk. Now, with a more appropriate weather, without heavy rains as in 2021, that was reversed. If we consider what happened in November, we will see the main influences in the fall of prices came from the fall of prices of beef, chicken and milk. In all these cases supply is higher,” Mr. Brandão adds.

Know more about the IPP

The Producer Price Index - IPP, whose scope is the mining and manufacturing industries, aims at measuring the average change of sale prices received by 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 monitoring and, consequently, a valuable analytical instrument to decision makers, 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 6,000 prices are collected monthly. Adopting the National Classification of Economic Activities (CNAE 2.0), the IPP produces indicators for 24 activities in the mining and manufacturing industries, besides reorganizing the same data into major economic categories, split into capital goods, intermediate goods and consumer goods (durable and semi-durable and non-durable).

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