IPP
Industry prices rise 19.40% in 2020, led by food products
January 29, 2021 09h00 AM | Last Updated: January 29, 2021 11h06 AM
In 2020, industry prices rose 19.40%, biggest increase since 2014 and 3.6 times above the annual average of 5.36% between 2014 and 2019. In December, the change was of 0.41% against November, the seventh positive change in a row, but still below the November index (1.38%). In the month, 17 of the 24 activities recordd positive price changes, versus 18 in November.
Data comes from Producer Price Index, which measures measures the evolution of 'factory gate' prices, excluding taxes and freight, of 24 activities from mining and quarrying and manufacturing industry, released today (29) by the IBGE. Cumulative data are the highest in the entire IPP series since its start in January 2014.
“There are two important movements in December: on the one hand, oil refining recorded a positive change and was the main influence on the monthly indicator; on the other hand, food products had a negative impact due to the apppreciation of Real in December," says Alexandre Brandão, manager of the IPP survey.
Mr. Brandão explains that among the main factors accounting for the rise of prices in the year is the depreciation of our currency by 25.2%, which has had an impact on exporting sectors. The main impact came from food products, which accounted for the major influence among all sectors, a total 7.11 p.p. out of 19.40%.
“Throughout the year, there were some important occurrences in segments, for example, the increased Chinese demand for beef, leading to a rise of prices in the international market. Another difficulty was the supply of soybean, also resulting in price rise throughout 2020. There was also a steep rise of rice prices in the middle of the year,due to the reduced supply and rise of prices internationall.”
Regarding food products, which accounts for 7.11 p.p. of the annual index (19.40%), the four products with a major impact on the result were soybean residue and derivatives, beef, soybean oil and rice. “These are highly-exported products in our industry - mainly soybean derivatives and beef - besides rice, facing problems in supply, besides rise of prices in the international market,” Mr. Brandão adds.
The other sectors accounting for the increase were chemicals, basic metals and mining and quarrying industry. Mr. Brandão highlights that Oil refining and alcohol products, which is a major influential sector in Brazilian industry, second to food procuts, was the only one to close 2020 with a negative change. That is probably due to the performance of crude oil in the international market and to the current energy policy in Brazil.
