In December 2016, the prices of the general industry increased 1.28% in relation to November, a change above that seen from October to November (0.80%).
Among the 24 activities surveyed, 18 recorded positive changes of prices, against 20 in the previous month.
The cumulative IPP of 2016 was 1.71%, against 0.42% in 2015. The Producer Price Index (IPP) measures the price evolution of products 'at the factory gate', without taxes or freights. The complete publication of the IPP can be accessed here.

Table 1
Producer Price Indez, by Mining and Quarrying and Manufacturing Industries
(General Industry) and Sectors - Last Three Months

Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria

The four major changes occurred in the products of the following industrial activities: mining and quarrying  (19.55%), Oil refining and ethanol products (2.53%), basic metals (2.20%) and tobacco (1.81%). As to the major influences, still concerning November/2016 (1.28%), they came from mining and quarrying (0.60 p.p.), Oil refining and ethanol products (0.25 p.p.), basic metals (0.16 p.p.) and motor vehicles (0.06 p.p.).

In December/2016, the cumulative index in the year reached 1.71%, against 0.42% in November/2016 and the biggest percentage changes were: mining and quarrying (34.37%), other chemicals (-12.36%), printing (9.54%) and toiletries, soaps and cleaning preparations (9.37%). Concerning this indicator, the sectors of greatest influence were  food products (1.77 p.p.)  other chemicals  (-1.32 p.p.), mining and quarrying industries (0.95 p.p.) and basic metals (0.44 p.p.).

In December 2016, the price change of 1.28% over November affected the major economic categories as follows (table 4): 0.05% in capital goods; 1.92% in intermediate goods; and 0.60% in consumer goods, with a 0.56% change in durable consumer goods and 0.62% semi-and non-durable consumer goods.

Table 4
Producer Price Index, by Mining and Quarrying and manufacturing Industries (General Industry)
and Major Economic Categories - Last three months

Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria

The influences of the major economic categories on the IPP of December were: 0.00 p.p. in capital goods, 1.06 p.p. in intermediate goods and 0.22 p.p. in consumer goods. In the case of consumer goods, the 0.17 p.p. was due to price changes in semi-durable and non-durable goods and 0.05 p.p. in durable consumer goods.

In the cumulative index of the year, the changes were: -0,41% of change in capital goods (with an influence of -0.04 p.p.), -0.10% in intermediate goods (-0.06 p.p.) and 5.21% in consumer goods (1.80 p.p.). In the latter case, the increase had an influence of 0.29 p.p. exerted by durable consumer goods and 1.51 p.p. by the semi-durable and non-durable consumer goods.

Next are more detailed analyses of the six sectors where the four main highlights were in December 2016, at least in one of the following criteria: greatest price changes, biggest influences, both in relation to November and in the cumulative index of the year_, and the major weightings.

Mining and quarrying industries: in December, the prices of the activity changed positively (19.55%) over the previous month, with the main monthly change seen in all the activities surveyed. With this result, the cumulative index in the year reached 34.37%, the greatest change being the one seen for the general industry.

Mining and quarrying activities also exert the main influence on the general industry in relation to November (0.60 p.p.), and the second biggest in the cumulative index of the year (0.95 p.p).

All the analyzed products in the activity presented a positive change in relation to November. In the monthly change and in the cumulative index in the year the highlights were: “iron ores”, which had a rise in their international prices due to the increasing Chinese demand for the commodity in 2016; and “Crude petroleum oil”, also aligned with international pricing.

Food products: in December 2016, food prices had positive changes of 0.14% and, as a result, the cumulative index of the year closed at 8.82%. Throughout 2016, nine monthly results were positive, December being the lowest of them all. On the other hand, the cumulative index in 2016 was lower than the one seen in 2015 (14.28%).

In December, the four products of major influence accounted for 0.12 p.p., with two of them (“cocoa butter” and “refined soybean oil”) also exerts influence in terms of change. The two other products of greatest influence were: “frozen poultry and giblets” and “residue of soybean extraction”.

The positive price change of the soybean derivatives in December reflects the increase of soybeans themselves, at a time of dollar appreciation in relation to real (in December a change of -0.5%, followed by almost a 5.0% change in November). In the case of “cocoa butter”, the negative change is in line with the drop of the commodity prices in the international market, particularly with the trends of the New York stock exchange. The price decrease in “frozen poultry and giblets” is partly explained by the higher supply (also of meat and other birds) during the Christmas holidays.

The highlight in the sector was due to the influence that the price change of the products exerted on the annual result of mining and quarrying industries and manufacturing industries, accounting for 1.77 p.p. in 1.71%, the highest influence among all activities surveyed. In the long-run, the derivatives of sugarcane ('crystallized sugar' and “refined sugar') had a positive impact, but the products’ prices were stimulated by an increasing international demand. In the case of soybean derivatives, the market along the year was marked by supply problems in Argentina and, to a certain extent, in the United States.

Oil refining and ethanol products: in December, the prices of the products in this sector had a positive change (in the comparison with November) of 2.53%, the greatest result of a year marked by seven negative changes and five positive ones. In the cumulative index of the year the prices underwent a drop (-2.44%), after having accumulated a 3.85% high in 2015.

The sector's highlight was exactly due to what happened between November and December, since it was the second greatest price change of all activities surveyed and also the second highest influence (0.25 in 1.28%).

The four products of highest influence in the month were petroleum products, with only one of them, “naphtha”, recording a negative change of price. Among the others, the two products of greatest weight in the calculation, “diesel fuel and other oil fuels” (52.13%) and “motor gasoline” (15.37%), pushed the result up. The four items standing out accounted for 2.68 p.p. of 2.53%.

In the long-run, all petroleum products had a negative impact on the index, except for “ethyl alcohol (anhydrous or hydrated)”. In the case of this product, the price rises were due to the strong demand for sugar in the foreign market.

Other chemicals: the chemical industry in December presented an average change of prices of -0.02% in relation to November, which resulted in a cumulative index in the year of -12.36% (the highest change of all activities in the manufacturing sector), very much attributable to the foreign market and the prices of petroleum products, especially naphthas.

A point to be considered is that, among the products with the main changes in the M/M_-1, none is part of those presenting the highest weight in the calculation (check the column of the products listed as the main 'contributions'), so, even with all the products that were the greatest highlights in terms of change presenting positive results, the average change of the activity in the month was negative.

The four products with a highlight in terms of month-on-month change are: “ammonium”, “styrene”, “ammonium sulphate or urea” and “superphosphates”. Besides these groups, also worthy of highlight are organic chemicals, specially the aforementioned “ammonium”, which tends to follow the levels set by international pricing.

Noticeable also is the fact that the four products of highest month-on-month influence (“styrene” and “ammonium sulphate or urea” with a positive result and “PEAD” and “polypropylene (PP)” with negative result) represented a net positive result in 0.19 p.p. in the change of -0.02% in the month, i. e., the other 28 products contributed positively with 0.21 p.p.

Basic metals: comparing the prices of the sector in December 2016 against November 2016, one can see the continuous offset of drops recorded in October and September leading to a positive average change of prices at 2.20% (second greatest change of the manufacturing industry in the month) and, therefore, accumulating in the year a positive change of 6.25%.

In the comparison with November, all products had positive changes, and the highlights were three products related to the steel industry (“carbon steel hot-rolled coil, uncoated”, “stainless steel coil or sheet, including strips” and “galvanized steel coils and sheets”), as well as a product belonging to the group of non-ferrous metal materials, “unwrought non-alloy aluminum”.

In relation the products that mostly influenced the month-on-month results and the cumulative index in the year, “carbon steel hot- and cold-rolled coils, uncoated” appear in both situations. In relation to November_, “unwrought non-alloy aluminum” and “carbon steel ingots, blocks, billets and plates” also stood out, but the former with a positive influence and the latter, a negative one. Finally, for the cumulative results in the year, the four highlights as influence presented positive values.

London stock exchange, which is usually responsible for the prices of products related to aluminum and cooper, presented a significant growth in the last fifteen days of November for aluminum, with a reflex in December. The four products previously mentioned as the most influential ones in the results of December in relation to November represented 1.44 p.p. of the 2.20% change in the month-on-month index.

The behavior of the sector is influenced by the combination of the steel industry groups’ results (related to steel products) and the group of the non-ferrous materials (copper and aluminum), which, on their turn, present very distinguished behaviors. The steel group is affected by the steel capacity surplus in the world, even after the steel production reduction effort in China coupled with the energy and natural gas cost; as to the second group, their prices are related to the international exchange markets and dollar changes.

Motor vehicles: in December, the change seen in the sector was of 0.60%, the fourth compared with the previous month. This was the fifth positive change in a row of the activity and the highest since August. That made the cumulative rate throughout 2016 reach 3.89%. It was the lowest figure observed since December 2013 (when it presented a cumulative change of 2.81%). For comparison purposes, in December 2015, the cumulative index had been 6.31%.

Besides being one of the sectors of greatest weight in the calculation of the overall index (just behind food), the highlight to motor vehicles derives from the fact that it is the fourth influence in the monthly change among all sectors surveyed (0.06 p.p. in 1.28%).

Among the four products of greatest influence in the comparison with November, three had a positive impact on the index: 'bio-fuel, gasoline or ethanol passenger car with any engine power output', 'motor vehicles engine pieces' and 'windshield wipers'), with the two formers among the three major weights in the activity. Just one product among the four most influential in the monthly change went the other way around, with a negative impact on the index: “bus bodies”. The influence of these four products was of 0.50 p.p. in 0.60%.