The Producer Price Index (IPP) changed -0.24% in May 2014 over the previous month, above the figure registered in the comparison between April 2014 and March 2014 (-0.41%). The cumulative index in 2014 stayed at 1.09% in May, against 1.33% in April.  When compared with the same month in 2013 (cumulative index in 12 months), the prices rose 6.59% in May 2014, against 7.10% in April.

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.

11 out of 23 activities surveyed increase prices

In May 2014, the prices in the Manufacturing Industries changed, on average, -0.24% in relation to April. Compared with April, 11 out of the 23 activities registered positive price changes, against 10 activities last month.  The four highest changes recorded were: electrical machinery and apparatus (2.53%), other chemicals (-1.61%), oil refining and ethanol production (-1.45%) and printing (1.04%). In terms of influence, the highlights were electrical machinery and apparatus (0.07 p.p.), other chemicals (-0.18 p.p.), oil refining and ethanol production (-0.17 p.p.) and machinery and equipment (0.03 p.p.).

The cumulative indicator in the year hit 1.09% in May. Among the activities which posted the highest percentage changes in the perspective of this indicator, the highlights were: electrical machinery and apparatus (6.79%), wearing apparel and accessories (5.79%), basic metals (4.74%) and furniture (4.60%). The sectors of higher influence on this indicator were: oil refining and ethanol production (0.44 p.p.), basic metals (0.36 p.p.), food (-0.32 p.p.) and motor vehicles (0.20 p.p.).

The cumulative price change in 12 months was 6.59%. The four highest changes in prices were registered in electrical machinery and apparatus (12.76%), footwear and leather articles (13.13%), tobacco (9.65%) and oil refining and ethanol production (9.22%). In this perspective, the main influences came from oil refining and ethanol production (1.03 p.p.), food (1.78 p.p.), other chemicals (0.63 p.p.) and basic metals (0.59 p.p.).

Food: the prices in this sector changed -0.07% in May, recording the third consecutive month of negative changes. Considering this figure, the cumulative change of prices up to May posted -1.55%. When compared with May 2013, the prices in 2014 were 9.19% higher. In this comparison, the results kept falling since March 2014 (11.55%).

Seven products stood out in terms of change and influence. In other words, only one product appeared in both cases - refined sugar from sugarcane -, reporting a positive influence. The other three products - all of them influencing negatively - which mostly influenced May´s result were:  "residues from soybean oil extraction", "crystallized sugar" and "concentrated orange juice". Together, these products accounted for -0.13 p.p. of the rate of -0.07%.

Oil refining and ethanol production: this activity changed -1.45% in May 2014 over April, registering the first negative figure since November. This figure was coming at a lower level after recording the highest monthly change of this sector in January. This sector recorded a cumulative change of 3.94% in the year, whereas the indicator in the last 12 months posted 9.22%.

The three products which mostly influenced were the same in the three indicators computed for May: "diesel fuel and other fuel oils", "aviation kerosene" and "naphtha". The fourth product was "ethyl alcohol (anhydrous or hydrated)", for the monthly and yearly indicators, and "motor gasoline", for the cumulative index in the last 12 months.                                                              

Other chemicals: the chemical industry changed -1.61% over April, decreasing for the third month in a row and accelerating the falling pace, as the figures in the previous months had been -0.35% and -1.58% for March and April, respectively. The indicator of the last 12 months decelerated after the December-February period, reaching 5.72% in May 2014 against April 2013. In the year, this sector recorded a cumulative rate of -0.22%, the first negative rate in 2014.

Among the four highlights, two products came from the class of basic petrochemicals: "ethylene" and "propylene". The subsector of thermosetting resins registered a negative monthly indicator ("polyethylene - PEAD"), though its biggest influence was on the indicator of the last 12 months, in which two of its products stood out: "polyethylene (PEAD)" and "polypropylene (PP)". However, it was a positive contribution for both indicators. As another highlight, "NPK-based manure" recorded positive figures both in the monthly indicator and in the cumulative index in the year.

Basic metals: this sector posted a positive figure in May 2014 (0.29%), reversing the drop in the last two months and contributing to reach 7.56% in the cumulative change in the last 12 months and 4.74% in the cumulative change in the year.

The cumulative change in the year of 4.74% and its respective influence of 0.36 p.p. on the result of the manufacturing industry explained why basic metals appeared as one of the sectoral highlights in the IPP. In terms of price change, the four main products belonged to the group of flat rolled steel products and registered positive figures: "cold-rolled steel carbon coils, non-coated", "stainless steel coils or plates, including stripes", "uncoated thick steel carbon plates" and "tinplate". As to the influence on the year, the highlights were: "carbon steel ingots, blocks, rods or plates", "non-alloy aluminum in raw form" and "hot-rolled steel carbon coils, non-coated", as well as "cold-rolled steel carbon coils, non-coated", which also stood out in terms of price change.

Electrical machinery and apparatus: the May´s figure (2.53%) was the highest rate since November 2013 (2.63%). As a result, this sector recorded a cumulative change of 6.79% in 2014. Compared with the same month in 2013, the rate was 12.76%, the highest rate in the time series.

The highlight lists in terms of change and influence were different on account of only one product: "electrical engines" appeared in terms of influence, but not of change, and "batteries, except for vehicles" appeared in terms of change, but not of influence. "Electrical engines" was the only negative change among the highlights. The four most influential products accounted for 2.20 p.p. (out of 2.53%). The other three products were: "refrigerators and freezers for domestic purpose", "washing and drying machines for domestic purpose", both belonging to the manufacturing of household appliances, and "frames and related items with electrical appliances for interruption or protection".

Machinery and equipment: The manufacturing of machinery and equipment changed 0.70% in May over April, reversing the path registered in the previous month (-0.42% against March). Considering May´s figure, the cumulative index in the year reached 0.02%. The slight change in the year caused the 12-month indicator to point to a level of 4.10%.

The four products which mostly stood out in the monthly indicator added up to 0.52 p.p. out of a total of 0.70%.  "Valves, taps and cocks" and "harvesters" recorded negative changes. On the other hand, "ball bearings, needles, cylinders or rollers" and "metallic silos" posted positive changes, reflecting the sector as a whole.

Motor vehicles: The manufacturing of motor vehicles rose 0.03%, increasing the cumulative index in the year to 1.85%. In relation to May 2013, this activity grew 3.46%. By reaching 8.34%, this activity remained at the highest level since the beginning of the time series.

The products that mostly influenced the monthly figure were "chassis with motor for buses and trucks" and "radiators and their pieces for motor vehicles", which rose the prices, and "tractor trucks for trailers and semi-trailers" and "motor pieces for motor vehicles", which decreased the prices. These products as a whole accounted for -0.03 p.p. of the M/M-1 index of May.