Industry prices rose 0.61% in June, compared to May. The cumulative index in the year reached 3.94%, while in 12 months it was 6.38%. In the month, 11 of the 24 activities showed price increases, against 15 in May.

The Producer Price Index (IPP) of the Mining and Quarrying and Manufacturing Industries measures the evolution of “factory-gate prices”, excluding taxes and freight, and comprises information by major economic categories, that is, capital goods, intermediate goods and consumer goods (durable and semi-durable and non-durable).

In June, the prices in industry changed, on average, 0.61% in relation to May. The four biggest changes were in the products in the following industrial activities: oil refining and ethanol products (17.07%), tobacco (-6.08%), footwear and leather articles (-5.82%) and other transportation equipment (-4.25%). In terms of influence in the overall result, oil refining and ethanol products (1.12 percentage points), basic metals (-0.21 pp), food (-0.20 pp) and mining and quarrying industry (0.17 pp) stood out.

The cumulative index of the year achieved 3.94%, against 3.31% in May. Among the activities which had the biggest percentage changes in this indicator, the highlights were oil refining and ethanol products (-25.37%), other transportation equipment (17.71%), wood (14.47%) and basic metals (14.41%). The sectors of greatest influence were oil refining and ethanol products (-2.70 pp), food (1.88 pp), basic metals (0.84 pp) and other chemical products (0.53 pp).

In the cumulative index in 12 months, the price change was of 6.38%, against 4.55% in May. The four biggest changes in prices occurred in transportation equipment (23.96%), oil refining and ethanol products (-19.24%), food (17.38%) and computer equipment, electronic and optical products (16.0%). In this indicator, the sectors with major influence were food (3.85 pp), oil refining and ethanol products (-1.94 pp), basic metals (0.66 pp) and motor vehicles (0.55 pp).

In June 2020, the price change of 0.61% was distributed as follows among the Major Economic Categories: -1.64% in capital goods; -0.3% in intermediate goods; and 2.51% in consumer goods, with 0.66% in durable goods and 2.91% in semi-durable and non-durable goods. The influence was: -0.13 pp in capital goods, -0.20 pp in intermediate goods and 0.94 pp in consumer goods. Regarding consumer goods, 0.04 pp were due to price change noticed in durable goods and 0.90 pp in semi-durable and non-durable goods.

In the cumulative index of the year, the price changes in industry accumulated, until June, a change of 3.94%, with the change of 9.53% related to capital goods (whose influence was of 0.71 pp), of 4.84% to intermediate goods (2.59 pp) and of 1.63% to consumer goods (0.64 pp). In the last one, the result had the influence of 0.32 pp from durable goods and 0.32 pp from semi-durable and non-durable goods.

In the last 12 months, the price change in industry achieved, in June, 6.38%, with the following changes: capital goods, 12.94% (0.96 pp); intermediate goods, 5.14% (2.81 pp); and consumer goods, 6.88% (2.62 pp). The influence of durable goods was of 0.43 pp and semi-durable and non-durable goods was of 2.19 pp.

See the highlights below:

Mining and quarrying: in June, the prices in the sector, when compared with March, changed 3.75%. As a result, the cumulative index of the year achieved 8.70% and, in 12 months, 0.69%. The result in June is the third positive in a row in comparison with the previous month and, in the cumulative index in those three months, it has increased 17.80%, rate a little bit higher than the decrease recorded in March (-17.12%).

The sector was the fourth major influence in comparison with the previous month, 0.17 pp, in 0.69%, therefore, it is a highlight.

The positive result has been linked to the price behavior of "crude petroleum oil", which, amongst the highlights, was the only one positive.

Food products: in June, the average change of prices in the sector was of -0.79%, the first negative result since January, -1.91%. With that, it changed 7.98% in the cumulative index of the year until June, and 17.38% in the comparison between June 2020 and June 2019.

The sector stood out due to the fact it was the third biggest change (in module) of prices in the comparison with the same month in 2019 and, regarding influence, the third in the comparison June 2020/May 2020 (-0.20 pp, in 0.61%), the second in the cumulative index (1.88 pp, in 3.94%) and the first in the comparison June 2020/June 2019 (3.85 pp, in 6.38%).

From the four highlighted products in terms of change, three are dairy products, all of them with positive price change rates, in line with the period of falls in milk capture in the drought season. The "sterilized milk/UHT/long life milk", which are in the biggest changes' list, also stands out in terms of influence, and is the only positive change within the four products. The negative changes affected products on the export list, therefore suffered impacts of the 7.9% appreciation of the real against the dollar. In the case of the soybeans derivatives, it is worthy mentioning that the global stock is on rise with the end of the harvest season in Argentina. However, the four highlighted products had an influence of -1.51 pp, in -0.79%, which means that 0.72 pp was the influence from others products (39) that compose the sector selection.

Regarding the open groups in the sector, the scenario in terms of products is quite solid. The group whose prices positively changed were: "dairy products" (12.55%), "milling, manufacture of starch products and animal feed" (1.75%) and "coffee roasting and grinding" (0.94%). Nevertheless, the prices of "slaughtering and manufacture of meat products" (-0.93%), "manufacture of vegetable and animal oils and fats" (-1.69%) and "manufacture and refining of sugar" (-9.5%), sectors in which products have a bigger weight in the calculation, had negative changes.

Oil refining and ethanol products: in the comparison with the previous month, since January (0.65%), is the first positive change in price in the series (17.07%), but even so the long term indicators remain with negative changes, even though less sharper. In the cumulative index of the year, the result of -36.26%, in May, changed to -25.37% in June; in the cumulative of 12 months, it changed from -36.01% (May) to -19.24%.

The sector stood out in all calculated indicators. In terms of change, in the comparison with the previous month, the sector was the first and the only one with positive rate. The other highlighted sectors are those strongly connected with the foreign market, " Manufacture of tobacco products", "Leather preparation and manufacture of leather goods, travel goods and footwear" and "Manufacture of other transportation equipment, except motor vehicles", which had price change in line with the 7.9% appreciation of the real against the dollar. It was the first highlight in the cumulative change, though, with negative impact, and the second in the cumulative of the last 12 months, also negative. In terms of influence, it was the first in the comparison with the previous month (1.12 pp, in 0.61%) and in the cumulative index of the year (-2.70 pp, in 3.94%), moreover, it was the second in the cumulative of the last 12 months (-1.94 pp, in 6.38%).

Other chemical products: the industry in June recorded an average price change of -1.80% in relation to May, the sharpest negative change in the year. As a result, the sector accumulated a positive change of 6.79% in 2020, yet higher than the cumulative index in 2019, which was -2.54%. In relation to the cumulative of 12 months, the activity achieved 2.39%.

The results in the last months are connected to the international prices, with the increase in the price of many imported raw materials, mostly due to the depreciation of the real against the dollar (the depreciation in the year was of 26.5%, although in June there was a positive trend, with the real appreciating by 7.9%) and to the supply reduction. Even though, products like the Naptha, raw material of many chemical products, recovered prices.

Regarding the economic groups in the activity, the changes that stood out were in "manufacture of inorganic chemicals", in which are fertilizers, with -3.30%, the highest negative rate since the beginning of the calculation of price changes in this industrial sector, accumulated 9.56% of changes in the year.

Another economic group that is worthy mentioning this month is "manufacture of resins and elastomers" with -3.65% of change, second biggest fall in prices, also since the beginning of the calculation in the series. This group has as its highlight the product "high density polyethylene (PEAD)"

In relation to the four products that most influenced the result in June (-1.21 pp, in -1.80%), three suffered fall in prices: "manure and NPK fertilizers", "mineral or chemical manure and fertilizers, phosphate" and "high density polyethylene (PEAD)". Only one of the four products had increase in prices: " pesticides for agriculture purpose", which composes the group "manufacture of agricultural pesticides and household disinfectants", with an average change of 0.86% in the month.

The chemical sector stood out, among all surveyed activities, in two of the analyzed indicators: it was the fourth influence in the cumulative index of the year and represented the third major contribution (8.34%) in the results of the overall indicator.

Basic metals: when comparing the average price of June against May, it changed -3.21%, interrupting a positive sequence of five price changes in a row. As a result, the cumulative of the year was of 14.41% and the cumulative of 12 months achieved 10.72%. It is worth mentioning that the change in the month was the sharpest negative one since July 2019 (-3.75%).

The result of the month derives, mainly, from four products, with two of them from the group of ferrous materials and two from non-ferrous, all of them with negative price changes. The products are: “ferroniobium”, “carbon steel ingots, blocks, billets or plates”, “gold for non-monetary use” and “Aluminum oxide (calcined alumina)”. The four products represent -3.31 pp of the month change, whereas the others account for 0.10 pp. Those same products were the highlights in March, April and May, though, most of the time with an opposite sign from the current change rate.

The four products which stood out in terms of influence in the result of the month are also highlights in the cumulative of the year, however, in this indicator, all changes were positive. In the cumulative of 12 months, the products are the same, except for “Aluminum oxide (calcined alumina)”, replaced with “stainless steel coil or sheet, including strip”.  “Carbon steel ingots, blocks, billets or plates”, which had a positive change in the cumulative index of the year, recorded a negative result in the cumulative index of 12 months.

The sector behaviour is influenced, mainly, by the sum of the results from the steel group (steel products) and non-ferrous group (copper, aluminum and gold), whose price behaviours are different.

The products from the steel group are affected by the need to provide outflow for the Chinese steel, also by the fluctuation of iron ores values and the real against the dollar - in June, in relation to May, there was a 7.9% appreciation of the real, however, considering the cumulative index of the year the real depreciated by 26.5%.

In relation to the second group - non-ferrous materials - the prices use to show results related to international stocks, as it can be seen in the “London Metal Exchange” (LME), though, in June, the depreciation of the dollar justifies the fall in prices.

Motor vehicles: in June, the change recorded in the sector, when compared with the previous month, was of -0.56%. This result was the first negative change in the year and also the sharpest fall in the sector since April 2016, when it changed -0.82%. As a result, the cumulative change in the year achieved 4.53% and, even though recording a lower value in relation to previous month, it is still the highest result in a month of June for this indicator in the whole time series. Moreover, the cumulative index in the last 12 months recorded increase of 6.75%.

The activity motor vehicles, besides recording the second biggest contribution in the calculation of the overall indicator (8.51%), stood out, among all surveyed sectors, as the fourth major influence in the cumulative indicator of the last 12 months (0.55 pp in 6.38%).

The economic group analyzed in the activity, “manufacture of cars, pick ups and SUVs”, recorded, in June, change of -0.62% in the comparison with May. Moreover, the group accumulated, in the first semester 2020, a change of 3.75%, whereas, in the last 12 months, it has shown a result of 6.03%.

Analyzing each product in the sector, it is possible to notice that, among the four products with highest influence in the comparison with the previous months, all of them had negative impact on the index: “gasoline or biofuel passenger cars, of any engine displacement”, “injection pumps for motor vehicles”, “parts or accessories for motor vehicles system” and “vehicles for transportation of goods, with diesel engine, with maximum load capacity not above 5 t”. The influence of those four products which had the biggest impact on the month change in relation to the previous month was of -0.51 pp, which means, the other 19 products in the activity also contributed negatively, with -0.05 pp.

In relation to the long-term indicators, the cumulative index of the year and the cumulative of the last 12 months, three products with major influence are frequent and had positive impact: “gasoline or biofuel passenger cars, of any engine displacement”, “tractor trucks, for trailers and semi-trailers” and “vehicles for transportation of goods, with diesel engine, with maximum load capacity not above 5 t”. Regarding the cumulative indicator of the year, the influence of the product “parts or accessories for motor vehicle systems” stood out, and regarding the cumulative indicator of 12 months, the product “diesel trucks with load capacity above 5 tonnes” stood out, both with positive impact in the respective indicators.