The Producer Price Index (IPP) changed 1.19% in July, in relation to June 2013, and stands below the rate seen between June and May (1.32%). As a result, the cumulative rate of the year reached 2.77%, against 1.56% in June and the cumulative index over the last 12 months went to 4.96%, against 4.24% in June.

IPP measures the evolution of “factory gate” prices, discounted taxes and freight, of 23 sectors of the manufacturing industry.  The complete publication can be accessed at

https://www.ibge.gov.br/home/estatistica/indicadores/precos/ipp/default.shtm.

In July/13, the prices of the Manufacturing Industries changed, on average, 1.19% when compared to June/13 - a lower figure than the one seen in the comparison between June/ 13 and May/ 13 (1.32%).  The figures of June and July 2013 are the highest seen since May 2012 (1.69%). Eighteen of the 23 activities registered positive price changes, against 19 in the previous month. The four major price changes were observed in: other chemical products (2.73%), tobacco (2.62%), food products (2.57%) and fabricated metal products (2.21%); the largest influences came from food products (0.50 p.p.), other chemical products (0.30 p.p.), petroleum refinement and alcohol products (0.10 p.p.) and fabricated metal products (0.06 p.p.).

The cumulative index of the year (July/13 against December 2012) reached 2.77%, against 1.56% in June/13. In this indicator, the activities with the highest percent changes were tobacco (9.71%), paper and pulp (8.08%), textiles (7.10%) and basic metals (5.44%).  Conversely, the major influences came from: other chemical products (0.45 p.p.), basic metals (0.42 p.p.), paper and pulp (0.27 p.p.) and petroleum refinement and alcohol products (0.24 p.p.).

The cumulative index in 12 months was 4.96%, against 4.24% in June.  The four greatest price changes occurred in tobacco (11.70%), other chemical products (10.55%), paper and pulp (10.26%) and textiles (6.97%) and the main influences came from other chemical products (1.12 p.p.), food products (0.71 p.p.), petroleum refinement and alcohol products (0.60 p.p.) and basic metals (0.46 p.p.).

A more detailed analysis is presented below for the nine sectors that in July were among the four main highlights at least in one of the following criteria:  highest price changes, largest influences, both in the three comparisons: M/M-1, cumulative in the year and M/M-12, and major weightings.

Food products: in July 2013, in the comparison with June 2013, the prices in the sector grew, on average, 2.57% and, as a result, for the first time in the year, the  cumulative index was positive, 1.04%.   In relation to the same month a year ago, the change was 3.53%, the lowest of the year and also the lowest in the July/July comparison in the series (15.25% in 2011 and 19.64% in 2012).

“Residues of soybean extraction”, “concentrated orange juice”, “wheat flour” and “sterilized/ UHT/ long life milk” were the four products of highest influence on the result, accounting for 1.70 p.p. of the 2.57%.

Of the four products sanding out in relation to June, the Real devaluation was relevant to the cases of "residues from soybean extraction", "concentrated orange juice” and “wheat flour” – but frosts in the South made the price of wheat more expensive and were partially responsible for the rise in the flour price.  In the case of "concentrated orange juice", besides the stimulus coming from exchange, the lower production in the USA contributed to the increase in the product's prices.  Conversely, for "residues of soybean extraction", in a slowly rising market, the exchange rate was the main explanation for the increase seen in July. Another point is that the dairy industry faces the smallest supply of the dairy farming regions in a period of droughts, which explains the rise in “sterilized/UHT/long life milk”.  

Paper and pulp: in July, the activity had its fifth price rise in a row and, therefore, the cumulative index of the year increased to 8.08% - even so, the rate did not surpass that of the previous year (the cumulative rate in July 2012 was 10.37%). The cumulative index in 12 months moved to 10.26%, the most significant since February (12.26%).

“Pulp" is one of the products that most influenced the indicator, showing up in MoM indicators, cumulative in the year and cumulative in the last 12 months.

Such results were significantly affected by the combination of the dollar rise and the increase of the export prices of pulp.

Petroleum refinement and alcohol products:  the activity registered a change of 0.92% in July in relation to June 2013, offsetting the negative trend recorded since May. The sector accumulates a high of 2.20% in the year and of 5.57% in 12 months.

In terms of influence, July over June, the four products which had more weight in this indicator were responsible for 0.86 p.p. of the 0.92% of the whole sector - all of them with a positive trend and related to petroleum refinement. The highlight was “kerosene”, which, despite offsetting the negative trend started in the previous month, is now acting as the upper bound of the price curve of the sector for the monthly indicator. Right after it, “naphthas” post the first price rising point since March 2013, due to the recent price stability on the international market and to the dollar rise over real. Closing the set of highlights, “diesel fuel and other fuel oil” and “basic lubricants” presented trends similar to last months’.

Other chemical products: the chemical industry registered in July 2.73% in relation to June. It was the second consecutive rise of the sector in terms of prices. In the year, the sector accumulated a high of 4.07%, and of 10.55% in 12 months.

As to values of July over June, the four highlights came from three distinct groups, all of which with positive trends.  In organic chemistry, “ethylene” and “propane”,  basic petrochemical products, are strongly affected by naphthas' prices, which, on their turn, are back again to positive levels in July.

After a deceleration of prices in this category since the last quarter of 2012, July posted growth. Inorganic chemistry recorded the influence of “NPK fertilizers”. Finally, the group of resins and elastomers was represented by “polypropylene”. Together, the four of them accounted for 1.64 p.p. (in 2.73%).

Basic metals: in July 2013, the sector of basic metals presented for the sixth time in the year a positive change of prices, 0.46% in relation to June 2013. With this change, the basic metals sector gathers a high of 5.44% in the year – the biggest, since July 2010 (7.63%) and also the greatest change in 12 months (5.94%) since IPP was first calculated (January 2010).

Fabricated metal products: the prices of the activity presented, in July, a positive change of 2.21%, in the comparison with the previous month: the greatest change for fabricated metal products, in the last 12 months. Such change was affected by the dollar rise over the real, and was among the four largest changes observed in the manufacturing industries, whose change in relation to June, as mentioned before, was of 1.19%.

The activity accumulated 4.63% in the year – also above the index seen for the manufacturing industry in the same period (2.77%) – and 6.52% in 12 months, above, as well, the result for the manufacturing industry (4.96%). The price rises seen in the sector are consistent with the rises in aluminum metallurgy occurred throughout the year.