In August of 2013, the Producer Price Index (IPP) changed 1.48% compared with the previous month; a higher result than July's (1.21%). August's result was the third biggest of the series, only the rates of May 2012 (1.69%) and January 2010 (1.50%). The cumulative indicator of 2013 was 4.30% in August, against 2.79% in July. When compared with the same month of 2012 (cumulative in 12 months), prices rose 5.97% in August, against 4.98% in July.

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 www.ibge.gov.br/english/estatistica/indicadores/precos/ipp.

22 out of 23 activities surveyed registered price rises

In August of 2013, 22 of the 23 activities surveyed registered a high in prices, against 17 in the previous month. The four major changes of August in relation to July came from food products (3.15%), tobacco (2.87%), other transportation equipment (2.86%) and footwear and leather articles (-2.69%).  The items to exert the greatest influence, or impact, on the change of August against July (1.48%) were food products (0.63 percentage points), other chemical products (0.15 p.p.), basic metals (0,14 p.p.) and petroleum refinement and alcohol products (0.09 p.p.).

The cumulative indicator of 2013 reached 4.30% in August, against 2.79% in July. Among the activities that registered the highest percentage changes as to the cumulative indicator, the highlights are tobacco (12.86%), paper and pulp (9.36%) footwear and leather (7.76%) and textiles (7.56%). The sectors to exert the greatest influence were food products (0.86 p.p.), other chemical products (0.61 p.p.), basic metals (0.55 p.p.) and petroleum refinement and alcohol products (0.34 p.p.).

When compared with the same month of 2012 (cumulative in 12 months), prices rose 5.97% in August, against 4.98% in July. The four major price changes came from tobacco (16.18%); other chemical products (13,81%), paper and pulp (11,90%) and  other transportation equipment (8,27%). The major influences in the comparison of August against the same month a year ago came from other chemical products (1.44 p.p.), food products (0.95 p.p.), petroleum refinement and alcohol products (0.61 p.p.) and basic metals (0.54 p.p.).

In August 2013, the prices of food products changed, on average, 3.15% - the largest positive change since May 2012 (3.23%). Therefore, the cumulative index in the year moved from 1.08% in July to 4.26%. When compared with the same month of 2012 (cumulative in 12 months), prices rose 4.67%. In this comparison, August's figure is the highest of the year. In August, the sector accumulated the largest price change in the series, when compared to the base-month, December 2009: 49.66% against 24.04% of the manufacturing industries as a whole. "Residues form soybean extraction" stood out both in terms of price change and influence in the comparison to the previous month.  The other highlights in terms of price changes are: "cocoa butter", "fresh or chilled pork" and "frozen beef". In terms of influence, the highlights are: "concentrated orange juice", "wheat flour" and "fresh or chilled beef". In the 3.15% change, 1.85 p.p. were due to the changes of the four products that stood out in terms of influence. The exchange rate devaluation (4.0% August-over-July and 12.8% August-over-December 2012) explains some of the highlights. It is the case of "cocoa butter", "residue of soybean extraction" and "concentrated orange juice", but also, because of imports, “wheat four”. In addition to the exchange rate devaluation (which is the basis of the change in "concentrated orange juice”), specific factors can be listed as the causes of the increases. In the case of “residue of soybean extraction”, climatic uncertainties in the USA (droughts) and the winter in Brazil, with the consequent demand of the product in order to complement animal feed, are important factors. As to “wheat flour”, recent bitter cold damaged the domestic production. The supply of meat (pork, fresh or chilled and beef, fresh or chilled as well as frozen), partly affected by the winter drought, was below demand (also due to the foreign demands).

In August 2013, the prices in the tobacco sector presented an average change of 2.87% compared to the previous month. As a consequence, the cumulative change of the sector was 12.86%. Comparing the prices of August 2013 and August 2012, the current ones were 16.18% higher than the previous year's. The main reason for the price rise is the positive change of the exchange market, of 4.0% in August, because of the great insertion of the sector in the foreign market, particularly due to the export of "processed tobacco" Also of note is the government regulation stipulating a minimum price for cigarettes and reducing the IPI tax rate over more expensive cigarettes. In the fixed-based series (comparison to December 2009), up to March 2012 (9.68%) prices changed below 10% (except for December 2011, 10.43%), but, in April 2012, the comparison was of 18.39% and, in August 2013, 47.71% - the second highest rate, only behind food products, 49.66%.

The sector of petroleum refinement and alcohol products had, in August, a change of 0.86% in relation to July, keeping the upward trend registered since June 2013. In the year, the sector accumulates 5.65%, 0.09 p.p. higher than July's result. Over the last twelve months, August 2013 against August 2012, the rate was 3.07%. The August/July indicator was mainly influenced by two products in the petroleum chain with a positive change, “kerosene” and “naphthas”, and two with a negative change, “diesel fuel and other fuel oils” (also from the petroleum chain), and “ethyl alcohol (anhydrous or hydrated)”. Together, the four of them represent 0.78 p.p., amounting to 0.86% of the sector as a whole. The highlights wit a positive change share the fact that their prices are set in the international market, reflecting, thus, the dollar rise. On the other hand, both “diesel fuel and other fuel oils" and “ethyl alcohol”, despite being from different chains, are notably dependent of the domestic market, reflecting factors such as the slowdown in the domestic demand e others related to the sugarcane harvest in the South-Center. From an annual perspective, though, some of the products standing out this month also explain the cumulative indicator. It is the case of “naphthas”, for example, which, despite the price rise from July from August, still keep below December levels in 2012. The three other highlights recorded, up to August, higher standards than those of the end of last year. “Diesel fuel and other fuel oils”, “gasoline” and “kerosene”, all of them petroleum derivatives, form the annual indicator, especially the first two ones, due to the rises set in the beginning of 2013. When compared with the same month of 2012 (cumulative in 12 months), the picture is very similar to the cumulative index of 2013, except for "naphthas". Within the year, this product has been keeping a negative change; however, in the comparison with August 2012, the result is the opposite, an evidence that the high from August to December 2012 is still responsible for the current level.

The sector of other chemical products recorded, in August in relation to June, a 1.34% change, which represented the third consecutive rise in the sector's price standards, even though it has pointed out a slowdown (in July, the figure was 2.78%). In the year, the sector accumulates 5.52%. In the comparison between August 2013/ August 2012, the sector registers 13.81%, the second highest among all the surveyed sectors (the first one is "tobacco", with 16.18% in the last 12 months). In terms of products, the monthly indicator presents as highlights three products from the group of resins and elastomers, “polypropylene (PP)”, "HDPE" and "LDPE", and one from the group of organic products, “ethylene”. All of them with a positive trend, their joint influence explains 1.09 p.p. of the sector's indicator, which stood at 1.34% in August. As they belong to the same chain (ethylene is the input of the others) and are linked to naphthas, their prices are strongly dependent on the latter, which increased between July and August. In the cumulative indexes of the year and over 12 months, the highlights are concentrated in organic chemistry and in the resins and elastomers:  “propane”, “polypropylene (PP)” and “ethylene”. The exceptions are "herbicides", from agricultural pesticides.  However, all of them register a positive trend.

The prices in basic metals changed, in August, 1.79%, a higher rate than the previous month's, 0.40%, and the second biggest of the year (the first was June's, 1.90%). As a consequence, the cumulative change of the sector was 7.27%. In the comparison with August 2012 (cumulative in 12 months), the prices in August 2013 were up 6.96%. In the month, among the four products that stood out in terms of change, three ("tinplate", "galvanized steel coils or plates " and "carbon steel rebar") belong to the steel industry and one ("aluminum bars, profiles or rebars") to aluminum. In terms of influence, two are under the steel industry ("carbon steel hot bobbins, uncoated" and "tinplates"), one under aluminum metallurgy ("unwrought non-alloy aluminum") and one under copper ("copper and copper alloy bars, profiles and rebars"). It is worth mentioning that out of the 1.79% change seen in August, 1.20 p.p. are attributable to the change of the four highlighted products. This year, the sector has been characterized, till June, by rate fluctuation. In the comparison with the same month last year, the change of 6.96% is the biggest of the series.

In August of 2013, the prices of motor vehicles recorded a positive change of 0.15% compared with the July's (- 0.03%). Thus, the cumulative index of the year reached the positive change of 2.23%. When compared with the same month of 2012 (cumulative in 12 months), the activity presented in August a positive change of 1.76% recorded in July 2013. The comparison with the prior month, in August, shows as the main positive influences "engine pieces for motor vehicles", "diesel truck with load capacity above 5 ton" and “trailers and semi-trailers”, and, as negative one, “gearbox for motor vehicles”. The four products amounted to 0.10 p.p. The remaining products had a positive influence of 0.05 p.p. Comparing with the base-month of the survey, December 2009, the prices of the sector, in August 2013, were 5.77% higher. It is the third lowest value in this comparison, only higher than the figure observed in "optical, electronic and computer equipment" (- 13.45%) and "printing" (3.14%).