In July 2015, the Producer Price Index (IPP) changed, on average, 0.68% when compared to the previous month's rate, a higher figure than that of June (0.34%). The cumulative indicator in 2015 reached 3.67%, against 2.97% in June. Compared with July 2014 (cumulative index in 12 months), prices rose by 7.62%, against 6.60% in June.

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  here.

16 of the 23 activities surveyed recorded rise of prices

In July 2015, compared with the previous month, 16 out of the 23 activities registered positive price changes, against 15 activities in the prior month. The four biggest changes observed in July took place among products encompassed by the following industrial subsectors: tobacco (2.63%), other transportation equipment (2.40%), leather articles and footwear (1.64%) and rubber and plastic (1.47%). The most influential items were food products (0.23 percentage points), petroleum refining and ethanol products (0.15 p.p.), other transportation equipment (0.06 p.p.) and rubber and plastic products (0.05 p.p.).

The cumulative indicator of the year reached 3.67%, against 2.97% in June/15. The highest percent changes in the cumulative index in the year in July/15 were: other transportation equipment (16.58%), tobacco (15.00%), pulp and paper (12.58%) and wood (9.58%). In terms of influence, the sectors in highlight were other chemical products (0.83 p.p.), food products (0.46 p.p.), paper and pulp (0.44 p. p.) and motor vehicles (0.40 p.p.).

Considering the cumulative index in 12 months, the change of prices was 7.62%, against 6.60% in June. The four major price changes occurred in other transportation equipment (30.43%), tobacco (29.01%), paper and pulp (22.26%) and wood (20.56%). The major influences came from food products (1.26 p.p.), other chemical products (1.19 p.p.), motor vehicles (0.92 p.p.) and paper and pulp (0.75 p.p.).

Food products: in July, the sector's prices changed around 1.17%, the biggest rate since March (1.70%). As a result, food products accumulated in the year a rise of 2.33%, in 12 months. The change was of 6.41%, the greatest since June 2014 (6.56%). The products of major influence were 'residue of soybean extraction', 'fresh or chilled meat', 'concentrated orange juice' and 'animal feed and supplements'. In the case of soybean byproducts, foreign exchange rates, intercrop and harsh weather conditions in the USA influenced the increase. It is worth pointing out that soybean is one of the raw materials for 'animal feed and supplements', which, as mentioned before, stands out as one of the biggest influences in the month. The price of meat, on its turn, has been influenced by the recently established rules for exporting to China. These four items accounted for 0.93 p.p. in the change of 1.17%.

Paper and pulp: the sector presented an increase of 1.18% in July, accumulating a 12.58% rise throughout 2015 and 22.26% in the comparison with July 2014. Compared with June's index (2.74%), July's fell 1.56 p.p. The four products of greatest influence were 'pulp', 'Kraft paper for packaging, uncoated', 'paper for writing, printing and other graphic uses, not coated with inorganic matter' (with positive change) and 'folding boxes and cartons of card stock or poster board' (with a negative change), which accounted for 1.17 p.p. of the 1.18%

Petroleum refining and ethanol products: in July, the sector recorded an increase of 1.43%, accumulating a drop of 1.22% in the year and an increase of 1.42% in 12 months. The products standing out in July, both in terms of change and influence, are all petroleum derivatives; together they accounted for 1.42%. p.p. in the result of 1.43%.

Other chemical products: the chemical industry registered in July 2015 a positive change of prices of 0.34%, which generated a cumulative index over the year of 7.74% (the highest rate in this kind of comparison in the entire IPP series) and of 11.02% in the comparison with the same month of 2014. The scenario of the chemical industry in terms of basic petrochemicals and intermediate for plasticizers, resins and fibers is linked to international values and to naphtha prices. Naphtha fell considerably between December 2014 and March 2015, but it recovered the prices in the last four months. In relation to influence, month on month, the highlights are 'manure and NPK fertilizers', 'unsaturated ethylene (ethane)' and ‘styrene-butadiene rubber’, with positive results and 'unsaturated propane (propylene)', with negative results. The four items of greater influence accounted for 0.79 p.p. in the result of 0.34%; that is, the other 28 products contributed with -0.45 p.p.

Rubber and plastic: the prices of this sector, when compared to those of June, changed 1.47%, the biggest rate seen since January 2014 (1.66%). The cumulative index in the year reached 4.44%, again the highest result since December 2013 (4.49%). In 12 months, the sector accumulated a change of 3.97%, the biggest since May 2014 (4.32%). In terms of influence, the highlights are 'new tires for trucks and buses', ‘plastic connections and accessories for tubes', 'plastic material films (including BOPP)' and 'plastic tubes, pipes and hoses, except flexible ones', contributing with 1.13 p.p. of the 1.47% result.

Motor vehicles: in this sector, the positive result of July against June (0.27%), almost offset the negative one seen from June to May (-0.25%). Thus, cumulative rates in the year and in 12 months stayed at 3.60% and 8.33%, respectively, quite close to May's results. The four products with biggest participation were 'engine pieces for motor vehicles', ‘bodies for buses', ‘tractor trucks for trailers and semi-trailers' and 'gear boxes for motor vehicles' which numbered an influence of 0.23 p.p. in the 0.27% result.

Other transportation equipment: in July 2015, the sector's prices recorded a positive change of 2.40% over the previous month. The result in this indicator is linked to the exchange rate fluctuation (R$/US$), so much so that, in the cumulative index over the year, there was a change of prices of 16.58% - against an exchange rate of 22.1% - and, in the last 12 months, of 30.43% - against an exchange rate of 44.9%.