In August, the prices of the overall industry changed, on average, -0.26% in relation to the previous month, a figure above that reported in July (-0.57%). The cumulative index in the year stayed at -0.93% in August, against -0.68% in July. The cumulative index in 12 months stayed at 3.03%, against 4.29% in July. Among the 24 activities of the mining and manufacturing industries, 11 of them recorded positive price changes, against eight in the previous month.

The Producer Price Index (IPP) of the Mining and Quarrying and Manufacturing Industries measures the evolution of the prices of products 'at the factory gate', without taxes and freight. It includes information on the major economic categories, like capital goods, intermediate goods and consumer goods – durable, semi-durable and non-durable. The complete publication can be accessed at https://www.ibge.gov.br/english/estatistica/indicadores/precos/ipp/default.shtm
 

Table 1
Producer Price Indexes, according to Mining and Quarrying and Manufacturing Industries
(Overall Industry) and Sections - Last three months

Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria

In August 2016, the price change of -0.26% against July impacted on the Major Economic Categories in the following way: -0.16% in capital goods; -0.44% in intermediate goods; and 0.02% in consumer goods, being 0.92% in durable consumer goods and -0.26% in semi and non-durable consumer goods.

The influence of the major economic categories on the overall industry (-0.26%) was: -0.01 p.p. from capital goods, -0.25 p.p. from intermediate goods and 0.01 p.p. from consumer goods. In the case of consumer goods, -0.07 p.p. was due to price changes observed in semi and non-durable consumer goods and 0.08 p.p. in durable consumer goods.

As to the cumulative index in the year – current month versus December last year –, the industrial prices changed -0.93% until August, being -3.05% due to capital goods (influencing -0.27 p.p.), -2.69% to intermediate goods (-1.53 p.p.) and 2.49% due to consumer goods (0.86 p.p.). In this last case, the increase was influenced by durable consumer goods (0.22 p.p.) and by semi and non-durable consumer goods (0.64 p.p.).

In the annual rate (M/M_-12), the industrial prices reached 3.03% in August, including the following changes: capital goods, -0.31% (-0.03 p.p.); intermediate goods, 0.78% (0.45 p.p.); and consumer goods, 7.63% (2.61 p.p.), being the influences of durable consumer goods 0.33 p.p. and that of semi and non-durable consumer goods, 2.28 p.p.

Table 4
Producer Price Indexes, according to Mining and Quarrying and Manufacturing Industries (Overall Industry)
and Major Economic Categories - Last three months

Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria

11 of 24 activities register positive price changes

The four highest changes in August 2016 were registered among the products of the following industrial activities: mining and quarrying industries (4.15%), other chemicals (-2.54%), wearing apparel and accessories (-2.10%) and tobacco (-1.60%). In terms of influence, the highlights were other chemicals (-0.24 p.p.), food products (-0.15 p.p.), mining and quarrying industries (0.11 p.p.) and basic metals (0.11 p.p.).

Concerning the cumulative rate in the year – August 2016 versus December 2015 –, this indicator hit -0.93% against -0.68% in July 2016. Among the activities that recorded the highest changes in August 2016, the highlights were: other chemicals (-13.07%), other transportation equipment (-10.88%), tobacco (-10.31%) and printing (10.21%). In this comparison, the sectors that mostly influenced were: food products (1.40 p.p.), other chemicals (-1.40 p.p.), oil refining and ethanol products (-0.58 p.p.) and other transportation equipment (-0.28 p.p.).

When comparing August 2016 with August 2015, the price change posted 3.03% against 4.29% in July 2016. The four highest price changes were registered in food products (17.08%), toiletries , soaps and cleaning products (13.27%), printing (12.37%) and other chemicals (-10.71%). The sectors that mostly influenced this indicator were: food products (3.25 p.p.), other chemicals (-1.16 p.p.), motor vehicles (0.38 p.p.) and basic metals (0.19 p.p.).

Mining and quarrying industries: In August, the mining and quarrying industries recorded the major positive change (4.15%) among all the mining and manufacturing industries. The influence of the price change of this activity on the M/M_-1 indicator of the overall industry was of 0.11 p.p. (in -0.26%), becoming the main positive influence on this indicator, together with basic metals. Taking into account the positive price change in August, the cumulative change in the year reached 3.67% against -0.46% up to July. Compared with August last year, the prices of this activity positively changed 0.53%. The positive price change in August was mainly influenced by the rise in the international prices of iron ore in this period.

Food products: the prices of food products changed -0.71%, on average, between July and August 2016, representing the first negative figure since April 2016 (-0.08%). As a result, the cumulative price change along the year declined from 7.75% in July to 6.99%. This figure was higher than that reported in August 2015 (4.43%). In the comparison between August 2016 and August 2015, the current prices were higher than those last year by 17.08%, making this sector the main highlight in terms of price change.

In August, the price change in the food sector made it a highlight, in terms of influence, in the three comparisons under this analysis. It hit the second position in the M/M_-1 comparison (-0.15 p.p., in -0.26%), only after other chemicals (-0.24 p.p.) and hit the first position both in the cumulative (-1.40 p.p., in 0.93%) and in the M/M_-12 (3.25 p.p., in 3.03%) indicators.

August marked a turning point in the price of 'sterilized milk/UHT/long life milk', which were positively influencing the result of this sector since February 2016. In this regard, the negative change recorded was the highest (in module) of this sector, as well as the highest influence. In terms of influence, 'residue of soybean oil extraction' (negative influence), 'fresh or cooled beef' and 'crystallized sugar' (both with a positive influence) also stood out and, together, influenced -1.07 p.p. in -0.71%.

In the case of the most influential products, the companies that participated in the survey pointed out that: i) in the case of 'sterilized milk/UHT/long life milk', a bigger supply in the dairy belts reduced its cost, which was reinforced by a weaker domestic demand; ii) in the case of 'residue of soybean oil extraction', the international supply was at a higher level, potentially one of the highest in recent times; iii) in the case of 'fresh and cooled beef', the main explanation was in the incentives received from foreign markets; and iv) the foreign demand caused the increase in the price of 'crystallized sugar'.

Oil refining and ethanol products: comparing August 2016 with July 2016, the prices in this sector changed -0.74%, representing the first negative figure after two consecutive months of positive changes. As a result, the cumulative index in the year reached
-5.50%. Compared with the same month a year ago, the change was of
-0.27%, representing the first negative figure since May 2015 (-0.40%).

In spite of being one of the sectors that mostly contributes to the mining and manufacturing industries, this sector stood out as it was the third highest influence on the cumulative rate in the year (-0.58 p.p., in -0.93%), right after food products (1.40 p.p.) and other chemicals (-1.40 p.p.). The four products that mostly influenced the M/M-1 indicator – see chart below – were responsible for -0.72 p.p. of the change of -0.74%, highlighted by the negative change of 'naphtha'. These same products were among the biggest influences on the cumulative rate in the year. It should be noted that the two products with the highest weight among them ('diesel fuel and other fuel oils' and 'ethyl alcohol (anhydrous or hydrated)') positively influenced both the M/M_-1 indicator and the cumulative index, which did not prevent the result to be negative.

Other chemicals: the chemical industry registered a negative price change of 2.54% in August over July, dropping for the second month in a row and resulting in a cumulative index in the year of
-13.07% (the highest change in absolute terms). When compared with the same month a year ago (M/M_-12), the prices in this sector changed -10.71% in August 2016, posting the fourth highest change in absolute terms ever registered and the highest reduction of prices in the survey, much as a consequence of the international market and of the prices of petroleum derivatives.

The four products that mostly influenced the month over immediately previous month comparison – “NPK-based manure and fertilizers”, “unsaturated ethylene (ethene)”, “herbicides for agricultural purposes” and “polypropylene” – accounted for -1.86 p.p. of the result of -2.54%, i.e., the other 28 products contributed with -0.68 p.p.

Basic metals: the comparison of the prices of this sector between August 2016 and July 2016 recorded a positive change of 1.51%, achieving four increases in a row. As a result, this sector posted a positive change in the cumulative rate in the year of 3.29% and, in the last 12 months, of 2.55%. Two out of the four products with the highest weights in this activity mostly influenced the results in the August versus July indicator: 'carbon steel ingots, blocks and plates', the highest positive influence among them all, and 'uncoated hot-rolled steel carbon coil'. The other highlights were 'tinplate' and 'copper and copper alloy bars, profiles and rebars', the latter showing a negative change, reflecting the effects of the London Metal Exchange on copper and the devaluation of the dollar against the real.

Among the 22 products selected for the survey, the four highlights in terms of influence on the M/M_-1 indicator accounted for 1.47 p.p. of the monthly change, i.e., the other 18 products influenced 0.04 p.p.

Motor vehicles: in August, the prices of this sector registered an average change of 0.73%, a positive figure after two negative ones. As a result, the cumulative rate in the year reached 1.80%, below that recorded in August 2015 (4.50%). Having changed 3.56%, the M/M_-12 indicator posted the lowest change in the year, which started with a change of 7.14% in the comparison between January 2016 and January 2015.

In spite of being one of the sectors with the highest weight for the result of mining and manufacturing industries, motor vehicles stood out as it was the third biggest influence (in module) on the M/M_-12 indicator (0.38 p.p., in 3.03%), right after food products (3.25 p.p.) and other chemicals (-1.16 p.p.).

The presence of 'flex-fuel, gasoline or ethanol passenger car with any engine power output' both in the M/M_-1 and in the M/M_-12 indicators should be noticed, as it has the highest weight in the computation of the results of this sector (close to 49.0%). It was due to the introduction of new models by some companies and, in the case of the M/M_-12 indicator, to the fact that they were introduced in two moments, January and August.

Other transportation equipment: in August, the prices of other transportation equipment remained dropping (-0.83%). As a result, the prices of this activity were falling for seven months in a row. The cumulative index in the year stayed at -10.88%, representing the second major cumulative change in the overall industry. Compared with August 2015, the change was negative (-4.36%). The prices of this activity stood out in terms of the negative influence on the cumulative change in the year for the overall industry (-0.28 p.p.). Along the year, the drop in the prices of this activity was mainly influenced by the prices of 'airplanes weighting more than 2,000 kg'.