The Producer Price Index (IPP) changed –0.46% in January when compared with December, a lower result than that of the comparison between December and November (-0.17%).  When compared with the same month a year ago (accumulated in 12 months), prices changed 1.72% in January and 2.60% in December. The index accumulated in the year is equal to the indicator of January (- 0.46%).

The IPP measures the evolution of “factory gate prices”, discounted taxes and freight, of twenty-three sectors of the manufacturing industry. The complete publication can be accessed at www.ibge.gov.br/english/estatistica/indicadores/precos/ipp.

In January, 11 of the 23 activities were up in relation to December

In January 2012, 11 of the 23 activities registered positive price changes compared with the previous month. In December 13 activities were up in relation to November.

The four highest changes observed in January were registered for the products of the following industrial activities: other chemical products (-2.93%), manufacture of machinery and apparatus (2.45%), paper and pulp (-1.99%) and tobacco (-1.92%). 

In terms of influence, in the January/12 and December/11 comparison (-0.46%), the highlights were other chemical products (-0.32 p.p.), basic metals (-0.13 p.p.), manufacture of machinery and apparatus (0.11 p.p.) and paper and pulp (-0.06 p.p.) (see picture 2). 

In the comparison between January/2012 and January/2011 (accumulated in 12 months), the price change was 1.72%, in contrast with the 2.60% of December. The four major price changes were observed for footwear and leather (19.01%), beverages (9.43%), paper and pulp (-8.68%) and computer equipment, electronic and optical apparatus (-7.80%). 

The main influences on the indicator of January accumulated in 12 months came from food products (0.41 p.p.), petroleum refinement and alcohol products (0.35 p.p.), paper and pulp (-0.30 p.p.)

and motor vehicles (0.29 p.p.). 

Manufacture of machinery and equipment recorded a positive price change in January (2.45%) on a month over month basis; a higher result than that accumulated in 2011 (0.95%), when the sector experienced ups and downs.

In 12 months, the sector accumulated a positive change of 3.53%.

The products with the most considerable positive influences in the comparison with December/2011 were roller bearings for industrial equipment, wheel-loaders, tractors, except for agricultural purposes, and harvesting machines.

These products were responsible for 2.19 p.p. of the rate (2.45%).

Concerning the indicator accumulated in 12 months, the greatest positive contributions came from tractors, except those for agricultural purposes, roller bearings for industrial equipment and irrigation equipment (for agricultural purposes).

The main negative contributor was agricultural tractors. In both indicators, the greatest influences came from two products: roller bearings for industrial equipment and tractors, except agricultural tractors. In general, these products increased the sales in the internal market.

In January 2012, the prices of computer, electronic and optical products registered the highest positive change of the series (1.23%, above the 1.21% of May 2010) in the month on month comparison. Yet, the comparison between January 2012 and January 2011 is negative (-7.80%), though in a lower level than that of the series started in January 2011, that is, only in December 2010, the comparison with the same month of one year ago (December 2009) generated a higher absolute value (-5.03%).

In terms of price change, the highlight was the increase in the prices of televisions and cell phones, attributable to the end of the Christmas sale. The former is a positive highlight both in terms of price and influence; the latter is only a positive highlight in terms of influence. Concerning negative price changes, the main contributor was energy meters, both in terms of change and influence. In addition, radio receivers for any purpose, combined with other apparatus, was also an important contributor. These four products account for 1.17 p.p. (out of 1.23%). 

In a long-term perspective (January 2012 against January 2011), televisions and cell phones and PC desktops were negative highlights in terms of both influence and change, whereas image tubes for television receivers and video monitors was the only positive influence.

The sector of other chemical products registered –2.93% in January 2012 in contrast with December 2011, the highest negative change of the 23 sectors of the manufacturing industry covered by the survey.

This is the third consecutive fall of prices in the chemical industry. The result was mainly driven by the manufacture of intermediate goods for fertilizers, which also contributed to the unchanged indicator of October 2011, last positive change in the sector. However, the month/same month a year ago indicator keeps up (1.88%) due to the considerable increase of the first months of 2011.

The product highlights in January when compared with December were: ammonium sulphate or urea, unsaturated ethylene (ethane), manure or NPK fertilizers and LDPE. All these products presented a negative change in this indicator: -2.19 p.p. of the –2.93% of the sector as a whole. Three of the products with the highest influence on the indicator accumulated in 12 months are the same products highlighted in the comparison between January and December: manure or NPK fertilizers, unsaturated ethylene (ethane), unsaturated propane (propylene) and polypropylene. The exception was titanium dioxide. In terms of change, both titanium dioxide and manure or NPK fertilizers presented rates above those of January 2011, in January 2012.

The production of paper and pulp recorded a negative price change of 1.99% comparing January and December of 2011. The index was revised down in relation to December (when there was a positive change) and kept a downward trend in the second semester of 2011. As to the indicator accumulated in 12 months, the activity registered a negative change of 8.86%.

The products which had the greatest influence in the comparison between January and December were pulp (negative), uncoated kraft paper for packing (negative), notebooks (negative) and wavy or corrugated paperboard boxes (positive). 

These products were responsible for -2.04 p.p. in the month over month (M/M-1) index. 

In relation to the index accumulated in 12 months, the most influential products, besides pulp, were writing and printing paper and paper for other graphic purposes, uncoated with inorganic material; and writing and printing paper and paper for other graphic purposes, coated with inorganic material; and toilet paper. 

The results of the sector are particularly responsive to the pulp price patterns.

This product presented a price decrease in the international market throughout 2011, especially in the second semester. For that reason, in spite of the downfall of real in 2011, the influence of the product was negative in the sector’s outcome. In January of 2012, however, the exchange market itself justifies the negative change in the prices of the product, due to the rise of real. 

The prices in the tobacco sector presented a decrease of 1.92% compared to the previous month. This indicator result is mainly due to the downfall of the dollar in relation to real during the month.

The exchange rate influences the index because of the importance of the exports in the sector, particularly of processed tobacco, which assumed a highlighted position not only as the biggest negative change but also as the most influential in the index. 

As to the 12 month accumulated indicator, the result shows an increase of 5.17%.

In this indicator processed tobacco is highlighted due to its great influence. It is important to consider that the dollar increased by almost 10% (which explains the rise in the prices of tobacco in real), if December of 2011/January of 2011 are compared; on the other hand, the situation changed in January of 2012, when the American currency was down to 3%, compared to December of 2011.