In December 2014, the Producer Price Index (IPP) changed 0.56% compared with the previous month, below the figure registered in November (1.06%). The cumulative index in 2014 was 4.42% in December, against 3.84% in November. The cumulative rate in 12 months was 4.47% in November.

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.

18 of the 23 activities surveyed register a rise in prices

In December 2014, 18 out of the 23 activities surveyed increased their prices, against 20 in the previous month. The four highest changes in December in relation to November were in other transportation equipment (2.22%), tobacco (2.05%), pulp and paper (1.99%) and leather articles and footwear (1.81%). The items that mostly influenced the change between December and November (0.56%) were oil refining and ethanol products (0.18 percentage points), food products (0.09 p.p.), other chemicals (-0.09 p.p.) and pulp and paper (0.07 p.p.).

The cumulative indicator in 2014 hit 4.42%, against 3.84% in November. Among the activities that recorded the highest percentage changes in terms of the cumulative indicator, the highlights were basic metals (10.16%), other transportation equipment (10.09%), leather articles and footwear (9.91%) and electrical machinery and apparatus (9.73%). The sectors that exerted the highest influences were basic metals (0.78 p.p.), oil refining and ethanol production (0.75 p.p.), motor vehicles (0.74 p.p.) and electrical machinery and apparatus (0.27 p.p.).

In December, the prices of the sector of food products changed 0.48% in relation to those in November. It is worth mentioning that only one positive figure was registered in the first seven months of the year (February, with 0.56%). The last five months recorded positive figures, being December the lowest not only among them, but also lower than February´s rate. The annual result of 2014 (0.83%) was the lowest in the time series, which peaked in December 2010 (21.24%). Before that, the lowest rate was posted in December 2011 (3.08%). Compared with the previous month, 'sterilized milk/UHT/long life milk' stood out as a negative contribution in terms of change and influence. In terms of influence, the other products that stood out - with an impact of 0.03 p.p. in 0.48% - were 'fresh or chilled beef' (positive contribution), 'residue of soybean oil extraction' (negative) and concentrated orange juice (positive). The currency devaluation that took place in December (of 3.60%) explained what happened with the price of orange juice and partly explained what happened with fresh beef. In the case of beef, the higher international demand should be a factor to take also into account. Even pressed by the currency rate, the prices of residue of soybean dropped, reflecting the high supply in Brazil.

After registering a positive change of 0.78% in the first quarter of 2014, the activity of pulp and paper reduced to a negative change of 2.02% in the second quarter and accelerated in the third quarter to 2.82%. The manufacturing of pulp and paper closed the fourth quarter at 5.62%, after registering a row of significant positive changes. The monthly index - comparison with the previous month - in December was the third highest figure in 2014 (1.99%). This figure stood below November (2.34%) and January (2.98%) only. Including this figure, the cumulative result in the year stayed at 7.30%, below that in 2013 (8.80%). The products that stood out in terms of influence in the comparison with November were 'pulp', 'notebooks', 'uncoated Kraft paper for packaging', with positive changes, and 'uncoated inorganic paper for writing, printing and other graphical uses', with a negative change. These products as a whole accounted for 1.99 p.p. of the monthly index. The valuation of the dollar also exerted a relevant influence on the performance of the prices of pulp, the most important product in terms of weight in this activity and strongly influenced by the foreign market. The products that mostly influenced the cumulative index in the year were 'notebooks', 'pulp', 'disposable diapers' and 'toilet tissue', all of them recording positive changes. 'Sanitary napkins and pads' also posted a significant positive change in the prices, both in the monthly comparison and in the cumulative index in the year.

Compared with the immediately previous month, the price level of the activity of oil refining and alcohol products declined from 1.80% in November to 1.59% in December. This sector closed the year with a cumulative index of 6.79%, below that in 2013 (7.07%). Much of the behavior of the cumulative index in 2014 was due to the variation of the monthly indicator. In November, the cumulative change in 12 months was 8.19%, resulting from the difference between the monthly index in November 2013 (0.64%) and November 2014 (1.06%). In terms of products, the four ones which mostly influenced the cumulative index in 2014 were 'diesel fuel and other fuel oils', 'motor gasoline', 'basic lubricants' and 'ethyl alcohol (anhydrous or hydrated)'. The first two products reported a positive bias and the others, negative. Even though the monthly indicator for alcohol registered a positive bias as a result of the off-season, the level remained below those in the previous periods.

The activity of other chemicals registered 1.46% in 2014, below that in 2013 (5.45%). In December, this indicator recorded a negative change (-0.79%) compared with the previous month. The chemical industry behaved differently in 2014 when compared with 2013. One of the differences was the amplitude of the variations, as well as the moments in which the extreme values took place. While the monthly indicator recorded its high in May 2013 (2.78%) an its low in August 2013 (-1.81%), it posted its low in March 2014 (-1.63%) and its high in July 2014 (1.17%). Such figures highlighted a lower volatility in 2014 than in 2013, as well as a change in the cycle over the last years. Still in the annual analysis, the four products that stood out were 'NPK-based manure and fertilizers', 'unsaturated ethylene (ethene)', 'unsaturated propene (propylene)' and 'ammonia'. The two basic petrochemicals (ethylene and propene) registered a negative bias in the cumulative index in the year. Among other reasons, such negative change was explained by the drop of these products in the international market, due to the devaluation of petroleum that took place along 2014.

The comparison between the prices of the sector of basic metals in December and November showed a negative change (-0.11%), breaking a row of four positive changes. As a result, this sector registered a cumulative change in prices of 10.16%, the highest positive change among all the activities of the manufacturing industry and the second highest change of this indicator since the beginning of the time series (January 2010). It should be taken in consideration the great influence of the figure of January 2014 against December 2013 (4.30%), the highest change in the month-against-immediately-previous-month comparison of this sector since the beginning of the time series. The change of 10.16% was the second highest in the series of cumulative indexes in 12 months, only below that of February 2014 (10.52%). Compared with the previous month, the highlights in December were products of the group of non-ferrous basic metals: 'copper and copper alloy bars, profiles and rebars' and 'unwrought non-alloy aluminum', both with positive changes; conversely, 'carbon steel ingots, blocks, rods or plates' and 'carbon steel rebars' stood out both in terms of changes and of negative influences in December. Altogether, these products represented -0.14 p.p. of the monthly variation of -0.11%. Concerning the influences, the highlights in terms of the monthly comparison and cumulative index in the year were: 'unwrought non-alloy aluminum' and 'uncoated hot-rolled steel carbon coil'. 'Carbon steel ingots, blocks, rods or plates' and 'unwrought aluminum alloy' also stood out in terms of the cumulative index in the year, both positively. The global figures of this sector were strongly influenced by the fluctuation of the dollar currency rate - devaluation of 18.1% of the Brazilian real in the last quarter of 2014 and of 3.6% between December and November -, which offset the drop of the international prices of non-ferrous metals, as well as by the expenditures with the consumption of energy for production.

The prices of the industry of electrical machinery and apparatus changed 1.24% in December in relation to the previous month, above that in November (0.61%). As a result, the prices of this sector reached the fifth consecutive positive variation in this indicator. This result was due, above all, to the higher prices of 'electric engines', 'electrical conductors with insulating layer, for voltages less or equal 1000v', 'optical fiber cables' and 'transformers of dielectric fluid'. By registering positive figures in nine out of the 12 monthly price changes, the cumulative rate in the year reached 9.73% in December, the fourth highest among the activities of the manufacturing industry. Along 2014, the cumulative indicator in 12 months of this sector recorded figures always above 8.40% (November´s figure), highlighted by the influence exerted by the group of 'manufacturing of stoves, refrigerators and washing and drying machines for domestic use', in which some products posted significant price rises in the end of 2013 and beginning of 2014.

After reducing the prices from 1.56% in the first quarter to 0.35% in the second quarter, the manufacturing of motor vehicles recorded a positive change of 2.55% in the third quarter and closed the year at 2.17% in the fourth quarter. The change in December in relation to the previous month was 0.49%. The cumulative indicator in the year stayed at 6.81%, above that in 2013, when it closed at 2.81%. The products that mostly influenced the monthly indicator were 'flex-fuel, gasoline or ethanol passenger car with any engine power output', 'engine parts for motor vehicles', 'bus bodies', with positive changes, as well as 'tractor-truck for trailers and semi-trailers', with a negative figure. These products as a whole accounted for 0.38 p.p. of the December´s index. Even though not exerting the same influence on the monthly index, the products 'wipers' and 'injection pumps for motor vehicles' also registered significant price changes. Besides their influence on the monthly indicator, the products 'flex-fuel, gasoline or ethanol passenger car with any engine power output' and 'engine parts for motor vehicles' also stood out for influencing the cumulative index in the year. Still concerning these two indicators, the products 'gearbox for motor vehicles' and 'diesel truck with load capacity above 5t' also considerably influenced them, all with positive changes. Even though not listed by its influence, the product 'starters for spark-ignition engines' recorded one of the four highest price changes in the cumulative indicator in the year.