In July 2017, the Producer Price Index (IPP) had a change of -0.99% against the previous month, a lower figure than that observed in the comparison between June and May this year (-0.20%).  Among the 24 activities, six increased their prices, against 16 of the previous month. The cumulative indicator of the year reached -1.27%, against -0.29% in June. This is the second biggest cumulative decline in the whole IPP time series, just behind the cumulative rate of April 2016 (-1.49%).

The Producer Price Index (IPP) of the Mining and Quarrying and Manufacturing Industries measures the evolution of the prices of products "at the factory gate", without taxes or freight. It includes information on the major economic categories, that is, capital goods, intermediate goods and consumer goods – durable, semi-durable and non-durable. The complete publication of the IPP can be accessed here.

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In July, the price change of -0.99% against June occurred among the Major Economic Categories as it follows: -0.62% in capital goods; -1.05% in intermediate goods; and -0.99% in consumer goods, with 0.19% in durable consumer goods and -1.36% in semi- and non-durable consumer goods.

The influences of the Major Economic Categories on the IPP of July were of -0.05 p.p. of capital goods, -0.59 p.p. of intermediate goods and -0.35 p.p. of consumer goods. In the case of consumer goods, -0.37 p.p. was due to price changes observed in semi- and non-durable consumer goods and 0.02 p.p. in durable consumer goods.

As to the cumulative index over the year (current month against December last year), price changes of industry reached, until July, a change of -1.27%, with 1.46% of change in capital goods (with an influence of 0.12 p.p.), -1.15% of intermediate goods (-0.64 p.p.) and -2.12% of consumer goods (-0.76 p.p.). In the latter, the result was influenced at 0.27 p.p. by durable consumer goods and at -1.03 p.p. by semi- and non-durable consumer goods.

In the cumulative index over 12 months, the industry price change reached, in July, 1.11%, with the following changes: capital goods, 4.06% (0.35 p.p.); intermediate goods, 1.05% (0.58 p.p.); and consumer goods, 0.50% (0.18 p.p.), with durable consumer goods with an influence of 0,42 p.p. and semi-and non-durable consumer goods, of -0,25 p.p.

18 of the 24 activities with price highs

In July 2017, over the previous month, 18 of the 24 activities had price declines, against eight in the previous month. The four major changes came from toiletries, soaps and cleaning preparations (-2.22%), food products (-2.00%), tobacco (-1.95%) and mining and quarrying industries (-1.81%). The most influential items were food products (-0.41 percentage points), petroleum refining and ethanol products (-0.14 p.p.), other chemicals (-0.14 p.p.) and basic metals (-0.11). 

In the cumulative index of the year (-1.27%), the activities with the highest percentage changes were mining and quarrying industries (-16.88%), non-metallic mineral products (-7.28%), food products (-6.47%) and basic metals (5.80%) and the sectors of greatest influence were: food products (-1.39 p.p.), mining and quarrying industries (-0.62 p.p.), basic metals (0.43 p.p.) and motor vehicles (0.33 p.p.).

In relation to the same month a year ago, the price change in July was 1.11%, against 1.53% in June 2017. The four biggest highs occurred in mining and quarrying industries (12.26%), basic metals (10.46%), non-metallic mineral products (-6.08%), motor vehicles (5.97%). In this indicator, the sectors of highest influence were: food products (-1.21 p.p.), basic metals (0.75 p.p.), motor vehicles (0.64 p.p.) and mining and quarrying industries (0.34 p.p.)

Mining and quarrying industries: in July, the prices of the sector changed by -1.81%, the main drops occurred among mining and quarrying and the manufacturing industries. The cumulative index in the year stood at -16.88%, with a highlight to the influence (-0.62) on the cumulative indicator of the general industry (-1.27%). In relation to the same month a year ago (12.26%), there was a positive change of prices in all products. In the month, except for "Crude petroleum oil", all products surveyed in the activity recorded a negative change in their prices. Conversely, in relation to the same month a year ago, all products of the sector registered price expansion, with a highlight to "iron ores".

Food products: the prices of the sector shrank, on average, -2.00% - the third biggest drop in the series, behind February 2013 (-2.58%) and January 2017 (-2.23%). The cumulative index in the year (-6.47%), as well as the July 2017/July 2016 comparison (-5.57%), recorded the greatest negative change of the series ever, regardless the month and year considered. The sector has the greatest contribution in the calculation of the index (20.92%).

Among the products, "Demerara sugar, including VHP", "crystallized sugar" and "Sterilized milk/UHT/Long life" stood out in terms of change and influence. "Fish preparations and canned fish" was the fourth product among the changes and the only one with a positive change in both lists. Among the influences, "fresh or cooled beef" was the fourth product, following the general negative trend of the sector. The four most influential products accounted for -1.39 p.p. in -2.00%.

Those sharper drops in the prices of products (both types of sugar, milk and fresh or cooled meat) are linked, to a great extent, to the harvesting period (sugarcane), good weather, which has favored milk collection, and the bigger supply of animals for slaughter.

Petroleum refining and ethanol products: the average change of -1.38% represents the fifth negative result of the year (the only positive ones were January, 5.54% and May, 2.45%). The cumulative result of the year was of -3.17% and in the last 12 months, -0.78% - the first negative result since December 2016 (-2.44%). The sector is the third one in terms of contribution (10.16%), and is the second influence in the calculation of the change seen between June and July (-0.14 p.p. in 0.99%). Among the products, "ethyl alcohol (anhydrous or hydrated)" was a highlight both in terms of change and influence. Among petroleum derivatives, the changes are mainly negative, except for "basic fuel oils", in the perspective of change, and "motor gasoline", in influence.

Other Chemical Products: the price drop of -1.42% was the third negative change of 2017. The cumulative index of the year reached 1.51%, helping maintain the price drops accumulated over the last 12 months (-0.16%), a constant feature since March 2016, (5.34%), except in April 2017, with 0.01%, and in May 2016, with 0.03%.

The main changes occurred in products that do not hold the highest weights in the calculation: "ammoniac", "styrene-butadiene rubber" and "LDPE", all three with a negative result, and "printing inks", with a positive result. The four products of greatest influence in the month had negative results. Polypropylene (PP)" is also among the four ones of biggest weight. The four products that mostly influenced in the month-over-month comparison accounted for -1.00 p.p. in the result of the month. In other words, the other 28 products contributed with -0.42 p.p in the month's result.

Basic metals: the change of -1.34% was the second negative result of the year. The cumulative index of 2017 (5.80%) was the lowest positive change of prices in all the 24 activities surveyed. In the last 12 months, the change was of 10.46%. In relation to the products that mostly influenced the results of the month against the previous month, there are four of greatest weight in the activity, all of them with negative results, namely: "carbon steel ingots, blocks, billets or plates", "carbon steel cold-rolled coil, uncoated", "carbon steel hot-rolled coil, uncoated", and "unwrought non-alloy aluminum".  Among the 22 selected products for the survey, the four with a highlight in the analysis of month-on-month influences, previously mentioned, represented -1.31 p.p. of the monthly change, i. e., the other 18 products had an influence of -0.03 p.p.

Motor vehicles: the change seen in the sector (0.18%) was the twelfth positive rate in a row of the activity. The cumulative index of the year (3.09%) presented the second biggest positive change for the month of July since the beginning of the time series, standing just behind July 2015 (3.54%). Besides being one of the sectors of biggest weight in the calculation of the general index (just behind the food sector), the activity of motor vehicles stood out, among all the sectors surveyed, in three other indicators: it presented the fourth biggest cumulative change in the last 12 months (5.97%); the fourth biggest influence in the cumulative change in the year (0.33 p.p. in -1.27%); and the third biggest influence in the cumulative change in the last 12 months (0.64 p.p. in 1.11%).

Among the four products of greatest influence month-on-month, two had a positive impact in the index ("bodies for trucks" and "biofuel, gasoline or ethanol passenger car of any engine power output", the latter with the greatest weight in the activity). Two other products among those of greatest influence had a negative impact on the indicator: "engine pieces for motor vehicles" and "tractor trucks for trailers and semi-trailers" (the products present, respectively, the third and fourth biggest weight in the sector, preventing a greater average change of prices in the activity this month). These four products contributed with 0.19 p.p. in 0.18%, i. e., the other 21 products of this activity contributed with -0.01 p.p.