In June 2014, the Producer Price Index (IPP) changed -0.13% compared with the previous month, above the rate recorded in May (-0.26%). For the first time ever, the time series registered four consecutive months of negative price changes (-0.41% in April and -0.21% in March). The cumulative indicator in 2014 reached 0.93% in June, against 1.06% in May. When compared with the same month of 2013 (cumulative in 12 months), the prices rose 5.04% in June, against 6.56% in May.

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.

Eight out of 23 activities surveyed increase prices

In June 2014, eight out of the 23 activities surveyed increased their prices, against 11 in the previous month. The four highest changes in June over May were registered in printing (3.40%), furniture (-1.36%), basic metals (1.23%) and other chemicals (-1.12%). The items that recorded the highest influence in June over May (-0.13%) were other chemicals (-0.12 percentage points), basic metals (0.10 p.p.), oil refining and ethanol production (-0.06 p.p.) and food products (-0.03 p.p.).

The cumulative indicator in 2014 hit 0.93% in June, against 1.06% in May. It was the second lowest change of this indicator in such month of the year, just below that of June 2011 (0.56%). Among the activities that posted the highest percentage changes in the perspective of the cumulative indicator, the highlights were: electrical machinery and apparatus (6.54%), basic metals (6.03%), wearing apparel and accessories (5.62%) and oil refining and ethanol production (3.47%). The sectors that exerted the highest influences were basic metals (0.46 p.p.), oil refining and ethanol production (0.39 p.p.), food products (-0.34 p.p.) and motor vehicles (0.21 p.p.).

When compared with the same month of 2013 (cumulative index in 12 months), the prices rose 5.04% in June, against 6.56% in May. This was the lowest figure in the time series since July 2013 (4.98%), whose peak occurred in February 2014 (8.24%). The four highest changes in prices were registered in electrical machinery and apparatus (12.09%), footwear and leather articles (11.26%), oil refining and ethanol production (9.35%) and basic metals (6.85%). The main influences when comparing June with the same month a year ago came from food products (1.29 p.p.), oil refining and ethanol production (1.02 p.p.), basic metals (0.54 p.p.) and electrical machinery and apparatus (0.33 p.p.).

By negatively changing in June over May (-0.14%), the prices of food products recorded a cumulative change of -1.68% until June, the sixth negative figure in a row. The same thing also happened at a more intense level in 2013, since the two highest rates for this indicator were reported at that time (-5.23% in March and -5.07% in April). As to the cumulative index in 12 months, the change of 6.60% in June 2014 against June 2013 was the lowest rate reported in the year, in a time series that was decreasing since March 2014 (11.55%). "Refined soybean oil" stood out in terms of change and influence, as it dropped its price in line with soybean prices, as a result of the increased supply from the USA. "Demerara sugar, including VHP sugar" is one of the highlights in terms of change - negative, due to the harvest - and "crystallized sugar" stood out in terms of influence - thanks to the higher demand. "Cookies and crackers" stood out in terms of influence thanks to the increased prices of the product, pressed by the largest manufacturers, who claimed an increased demand.

The activity of oil refining and ethanol production changed -0.48% in June, registering the second consecutive negative figure after five months of positive changes since November. This sector recorded a cumulative change of 3.47% in the year, whereas the indicator in the last 12 months posted 9.35%. The highlights in the monthly indicator were "ethyl alcohol (anhydrous or hydrated)", "naphtha", "aviation kerosene" and "diesel fuel and other fuels", all of them negatively changing in June. These products in highlight added up to -0.54 p.p. of the total of -0.48% for the indicator, which meant that the other products of the sector added a positive influence. It became clear that the major changes concentrated the drops. This was particularly true for alcohol, which had its supply increased - as well as for sugar -, due to the improved harvest of sugarcane. Along the year, the highlights were "diesel fuel and other fuels", "ethyl alcohol (anhydrous or hydrated)", "naphtha" and "basic lubricants". Even recording a cumulative yearly gain of 3.47% in the sector as a whole, only "diesel fuel" posted a cumulative positive change among the four highlight products. Nevertheless, "diesel fuel and other fuels", "naphtha for petrochemical", "aviation kerosene" and "motor gasoline" registered positive changes and influences in the last 12 months.

The industry of other chemicals changed -1.12% in June in relation to May 2014, recording the fourth consecutive month of negative changes. However, the drop decelerated in June over the previous month. The previous figures were -0.35% in March, -1.58% in April and -1.63% in May. After accelerating in the period between December and February, the cumulative index in 12 months decelerated ever since, reaching 2.69% in June 2014 against June 2013, the lowest value for this indicator since April 2012. In the year, this sector registered a cumulative rate of -1.36%, the second consecutive negative figure in 2014. Both in terms of monthly change and cumulative index in the year, the class of basic petrochemicals was the main responsible for the negative sign of the indicators in this sector for the second month in a row ("unsaturated ethylene (ethane)" and "unsaturated propane (propylene)"). The subsector of thermosetting resins also registered a negative monthly indicator ("polypropylene - PP"), though its biggest influence was on the indicator of the last 12 months, in which "PEAD" and "PEBD" (high and low-density polyethylene, respectively) stood out, both with a positive contribution. "NPK-based manure and fertilizers" recorded a positive monthly change, while "herbicides for agricultural use" stood out for the positive values in the cumulative indexes in 2014 and in 12 months.

Basic metals posted a positive figure in June (1.23%), maintaining the growing path started in the previous month, thus reaching 6.85% in the cumulative index in 12 months and 6.03% in the cumulative index in the year (highest index since the beginning of the time series). In June, the four products that registered the highest price changes in relation to May were also those that mostly influenced the final result. These products accounted for 1.38 p.p. of the change of 1.23% in June over May, whereas the other 18 products recorded a negative contribution of 0.15 p.p. In terms of positive changes and influences, the highlights were "other steel alloy bars, except stainless", "aluminum alloys in raw form" and "carbon steel ingots, blocks, rods or plates". As to the negative change and influence, the highlight was "stainless steel coils or plates, including stripes". Considering the price changes in June, the sector of basic metals was one of the highest influences on the monthly result of the manufacturing industry (0.10 p.p. in -0.13%, the only positive figure among the four most influential activities in June). Moreover, this sector was the highest positive influence on the cumulative indexes in the year (0.46 p.p. in 0.93%) and in 12 months (0.54 p.p. in 5.04%). In the cumulative indexes in the year and in 12 months, "non-alloy aluminum in raw form", "cold-rolled steel carbon coils, non-coated" and "hot-rolled steel carbon coils, non-coated" were the highlights in terms of influence, in both cases. "Carbon steel ingots, blocks, rods or plates" stood out in terms of influence on the cumulative index in the year and "uncoated thick steel carbon plates", on the cumulative index in 12 months. In 2014, the percentage of price changes in this sector was due to an extensive price recovery in January, as well as to the increase of the international prices of aluminum products and to the scope of new markets, even considering the excess of the supply of steel in the world.

The activity of electrical machinery and apparatus registered the highest changes in the cumulative indexes in the year and in 12 months, besides being the fourth highest influence on the cumulative index in 12 months. The change of June over May (-0.23%) caused the cumulative index in the year to decline 6.79% (May) to 6.54%. The cumulative index in 12 months changed 12.09%, less than in May (12.76%), yet higher than all the others along the year. It should be mentioned that 2013 closed at 7.37%, less than any of the six indexes in 2014. "Microwave ovens", "electrical conductors with insulating layer, for voltages less or equal 1000v" and "transformers of dielectric fluid" stood out in June against May, both in terms of change and influence. In terms of influence, "refrigerators or freezers for domestic use" also stood out. The four products influenced -0.13 p.p. in -0.23%, though only "electrical conductors with insulating layer, for voltages less or equal 1000v" recorded a negative change of prices.

The manufacturing of motor vehicles rose 0.06%, increasing the cumulative index in the year to 1.91%. This activity positively changed 2.62% in the cumulative index in 12 months. The products that most positively influenced the result of June over May were "gearboxes for motor vehicles", "bus bodies" and "suspension systems for motor vehicles", whereas "tractor trucks for trailers and semi-trailers" recorded the highest negative influence. These products as a whole accounted for 0.04 p.p. of the monthly index. The products that registered the highest positive impact on the cumulative indicator in 2014 were "passenger cars, gasoline, ethanol or bi-fueled, of any power", "tractor trucks for trailers and semi-trailers" and "gearboxes for motor vehicles". The product "motor pieces for motor vehicles" also stood out in terms of negative change. In the cumulative indicator in 12 months, "passenger cars, gasoline, ethanol or bi-fueled, of any power", "gearboxes for motor vehicles" and "chassis with motor for buses and trucks" stood out with positive figures, while "diesel trucks with an over 5-t capacity" stood out with a negative figure.