National industry prices grew 0.74% in April compared to the previous month. This was the third positive result in a row in this indicator. As a result, the Producer Price Index (IPP) accumulates an increase of 0.99% in the year and a drop of 3.08% in 12 months. In April last year, the change compared to the previous month was -0.35%. The data was released today (28) by the IBGE.

In April this year, there was an increase in prices for 20 of the 24 activities investigated by the survey. Among them, the most intense changes were recorded by paper and pulp (3.99%), tobacco (2.49%) and pharmaceuticals (2.10%). Among the negative indices, the highlight was mining and quarrying industries (-3.58%).

Survey analyst Felipe Câmara explains that the month's result is mainly related to the behavior of chains derived from soybean and sugar cane. “Soybeans are in the harvest phase, but the harvest has produced a smaller volume than last year. In addition to this lower productivity, the volume exported in the first quarter was significant, meaning there is less availability of the commodity for domestic consumption. In this context, crude oil responded to demand pressure associated with competition between derivative chains. The increase in the added portion of biodiesel in the diesel blend, starting in March, encouraged the use of soybean derivative to manufacture biodiesel, an increase that was followed by a purchase movement to guarantee stocks in the food manufacturing sector", he details.

He points out that, from the perspective of the broad economic categories, this scenario impacted the increase in consumer goods (0.89%), which represented 0.33 percentage points (pp) of the general index and equaled the influence of intermediate goods ( 0.33 pp). “Margarine had an important influence on the result of goods intended for final consumption, while crude oil itself had its impact reflected in the increase in intermediate goods (0.59%)”, he says.

“In the composition of the result of consumer goods, ethanol was also important in inflation compared to March, as well as medicines, whose notable increase occurred after the annual rise of the maximum price authorized by the sector's regulatory authority”, adds Mr. Câmara.

In relation to consumer goods, there was a change of 0.83% in durable consumer goods (BCD) and 0.90% in semi-durable and non-durable consumer goods (BCND). In addition to those already highlighted, there was also an increase in capital goods (1.16%).

Among the sectors with the greatest influence on the general result (0.74%), the highlights were food (0.19 pp), mining and quarrying industries (-0.19 pp), paper and pulp (0.12 pp) and petroleum refining and biofuels (0.08 pp).

In comparison with March, the food sector changed 0.80%, the first increase after three consecutive months with negative indices. The result was also impacted by the aforementioned increase in soybeans derivative, such as margarine and crude oil. With this result, the food sector accumulated a fall of 1.41% in April for the year, lower than that recorded in the previous month (-2.19%).

The paper and pulp sector (3.99%), in addition to the biggest increase among the activities surveyed in comparison with the previous month, also recorded the highest cumulative result for the year: 7.55%. According to the researcher, the widespread inflation in this industrial sector is related to the increase in the price of pulp: the price of the commodity has responded to the demand for stock rebuild in the consumer chain and, in April, was also pressured by higher costs associated with logistics and supply disruptions within the scope of international trade.

Prices in the petroleum refining and biofuels sector also rose in April (0.79%), for the third month in a row. “Ethanol was decisive for this increase, the mills' choice to direct sugarcane crushing to sugar production and the low level of relative price compared to gasoline opened space for increase in the price of ethanol. Biodiesel, pressured by the cost of purchasing soybean oil, also contributed significantly to the sector's rise”, analyzes the researcher. With this result, the cumulative result for the year in the sector went from -3.06%, in March, to -2.29%, in April.

In the mining and quarrying industries, prices fell 3.58% in April, the second consecutive month of decline. The main factor that explains the behavior of this activity are the prices of iron ore, which, in line with the international market, remained negative, while those of crude oil rose.

“The result of mining and quarrying industries is related to the international price of ore, on a recent downward trend. The international price responds to expectations of economic activity in China, in particular the demand for steel in the construction and infrastructure sectors, which are an important barometer for negotiated contracts. But we also cannot lose sight of the fact that the expectation of economic recovery in the rest of the world is not strong, which reinforces this pricing context”, highlights Mr. Câmara.

Learn more about the IPP

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 companies, the prices received by the producer, exempt from taxes, tariffs and freight, defined according to the most common commercial practices. Around 6 thousand prices are collected monthly. The complete IPP tables are available on Sidra. The next release of the IPP, for May, will be on June 27th.