Producer Price Index (IPP) changes by 0.41% in December and closes 2020 at 19.40%
January 29, 2021 09h00 AM | Last Updated: February 01, 2021 05h10 PM
Industry prices rose 0.41% from November to December, when 17 of the 24 activities surveyed recorded positive price changes versus 18 activities in the previous month. In 2020, industry prices had a cumulative rise of 19.40%, biggest increase since the start of the time series in 2014.
|Cumulative in the year/12 months||19.40|
Producer Price index (IPP) of mining and quarrying industry and of manufacturing industry measures the evolution of 'factory gate' prices, excluding taxes and freight, and covers information by Major Economic Categories, that is, capital goods, intermediate goods and consumer goods (durable and semi-durable and non-durable).
|Producer Price Index, by Mining and Quarrying and Manufacturing Industry (General Industry) and Sections - Last three months|
|General Industry and Sections||Changes (%)|
|M/M-1||Cumulative in the Year||M/M-12|
|B - Mining and Quarrying Industry||9.71||-2.05||-1.28||50.31||47.23||45.35||53.64||43.52||45.35|
|C - Manufacturing Industry||3.05||1.59||0.51||15.73||17.58||18.18||17.47||18.52||18.18|
|Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria|
In December 2013, industry prices recorded a 0.41% change over the previous month, a result close to that recorded in the November/ October comparison (1.38%). The four main changes in December came from oil refining and alcohol products (5.41%), other transportation equipment (-3.01%), rubber and plastic (2.75%) and tobacco (-2.38%).
The most influential items were oil refining and ethanol products (0.43 percentage points), food products (-0.31 p.p.), basic metals (0.11 p.p) and rubber and plastic (0.10 percentage points).
The cumulative index in the year hit 19.40%, versus 18.91% in November. Among the activities which recorded the biggest percent changes in this indicator, the main ones were mining and quarrying industry (45.35%), basic metals (34.36%), wood (32.71%) and food products (30.32%).
The main contributions came from food products (7.11 p. p.), mining and quarrying industry (2.04 p.p.), basic metals (2.00 p.p.) and other chemicals (1.83 p.p.).
In December, the change by 0.41% from November had an impact on the Major Economic Categories: -1.15% on capital goods; 0.50% on intermediate goods; and 0.58 % on consumer goods. Durable consumer goods recorded a change of 1.08%; semi-and non-durable goods, of 0.48%. Influence from Major Economic Categories was as follows: -0.09 p.p. on capital goods, 0,28 p.p. on intermediate goods and 0.21 p.p. on consumer goods. In the case of consumer goods, 0.07 p.p. was due to price changes in durable consumer goods and 0.15 p.p. in semi and non-durable goods.
In terms of cumulative index in the year, industry had cumulative change of 16.10% in capital goods (1.20 p.p), 24.41% in intermediate goods (13.05 p.p) and 13.18% in consumer goods (5.15 p.p). The result of consumer goods was influenced by products of durable consumer goods (0.77 p.p) and by semi and non-durable consumer goods (4.38 p.p).
|Producer Price Index, by Mining and Quarrying Industry and Manufacturing Industry (General Industry) and Major Economic Categories - Last three months|
|General Industry and Sections||Changes (%)|
|M/M-1||Cumulative in the Year||M/M-12|
|Capital Goods (BK)||2.61||0.09||-1.15||17.35||17.46||16.10||17.85||17.63||16.10|
|Intermediate Goods (BI)||5.05||1.48||0.50||21.98||23.79||24.41||22.56||23.98||24.41|
|Consumer Goods (BC)||1.19||1.49||0.58||10.87||12.52||13.18||14.45||14.12||13.18|
|Durable consumer goods (BCD)||1.00||0.87||1.08||9.42||10.38||11.57||9.78||10.24||11.57|
|Semi and non-durable goods (BCND)||1.23||1.61||0.48||11.17||12.96||13.51||15.44||14.92||13.51|
|Soucer: IBGE, Diretoria de Pesquisas, Coordenação de Indústria|
Here are te main highlights:
Mining and quarrying industries: in December, prices of the sector, in relation to November, changed by -1.28%, second negative result in a row (-2.05% in November), with a cumulative a change of 45.35% in 2020. It is worth mentioning that, in October, the cumulative index reached the highest figure in the series, 50.31%. Even so, in the end of the year, 2020 was the biggest in the series that started in December 2014.
The highlight given to the sector is due to the fact that it was the most significant change among all the sectors of mining and quarrying in the cumulative index in the year (which, in December, overlaps with the cumulative index in 12 months). In terms of influence, in the same cumulative index, the sector is the second main one (2.04 pp), in 19.40%.
The negative result was mostly associated to the decrease in the prices of the second product with the highest weight in the sector (37.68%), “Iron ore and its concentrates, crude or processed, except when pelletized or sintered”, given that the one with the highest weight, “crude petroleum oil” (40.54%), had a positive change in prices.
Food products: in December, prices of the sector changed, on average, by -1.17%, first negative result since June (-0.73%) and the third one recorded over the year (in January, -1.91%). Thus, in 2020, the prices of the sector changed by 30.23%, decreasing in relation to the cumulative index until November, 31.78%. In any case, it is the highest positive change in the series in the end of a year, surpassing that of December 2010, 21.24%.
The highlight given to the sector is due to the fact that it recorded the fourth highest cumulated change in the year (which, in December, is the same as in the cumulative index in 12 months), the second biggest influence in the month (-0.31p.p., in 0.41%) and the biggest influence in the cumulative index in the year, or in 12 months, (7.11 p.p., in 19.40%).
The four products with biggest changes in the prices are in the Brazilian export list. In this regard, the 5.0% appreciation of Real against the dollar explains, to some extent, the fall in the prices recorded in three of them. In the case of rise of “frozen poultry meat or giblets” prices, the reason lies in the higher demand, especially during Christmas period.
Regarding the open groups of the sector, considering the December rate against November, or the one of December 2020/ December 2019, three groups have rates above the average for the sector In the case of the monthly index, “slaughtering and manufacture of meat products” (-1.34%), "manufacture of vegetable and animal oils and fats" (-1.79%) and “manufacture and refining of sugar” (-2.72%). As for the cumulative index, “manufacture of vegetable and animal oils and fats” (63.82%), “milling, manufacture of starch products and animal feed” (40.17%) and “manufacture and refining of sugar” (30.81%).
In the explanation of 2020 results, it is worth mentioning the problem of rice supply, the exchange rate (with depreciation of Real against the dollar of 25.2%), as well as the peculiarities in the behavior of the international market with soybean and sugarcane derivatives, and meat in general.
Oil refining and alcohol products:in the comparison with the previous month, prices of the sector increased, on average, 5.41%, third positive change in a row. Despite that, in the year, prices changed by -5.47%, second year in the series with a negative figure (December 2016, -2.44%). In the cumulative index in the year, however, the most significant negative change occurred in May 2020, -36.26%, being the highest in the series, when compared to the same month in previous years, or compared to any other month.
The highlight given to the sector is due to the fact that it was the biggest change and influence, 0.43 pp, in 0.41%, in the monthly result. It was also the second sector with the highest contribution to the month’s result, 8.92%, against 27.14% of Foods products.
Considering the highlights among the most significant changes and influences, all of them are petroleum derivatives, including two accounting for the biggest weight in the sector calculation, “diesel oil” (40.74%) and “gasoline, except for aviation” (23.05%).
Other chemicals: the chemical industry in December recorded an average price change, in relation to November, of 0.43%, sixth consecutive increase, but the lowest positive change in the year. The sector had a cumulative positive change of 23.71% in 2020, almost 30 p.p. higher than the December 2019 results, which had been of -6.55%. The price change in 2020 is the highest in the entire IPP series. Regarding the cumulative index in 12 months, the figure of 23.71% is the highest since October 2018, when it reached 33.24%.
The results observed in the previous months are mainly related to international prices and to the increase in the prices of several imported raw materials, mostly due to the depreciation of the Real against the dollar over the year, which reached in 2020 25.2%.
In relation to the economic groups of activity, the highlights were the changes that occurred in “manufacturing resins and elastomers”, with 2.28% in the month, thus accumulating 56.51% of change in the year. The other economic groups that are detailed in the survey had negative results in the month: “Manufacturing of inorganic chemical products” with -1.14% in the month and 18.11% in the year, and “manufacture of pesticides and household disinfectants” with -0.55% in the month and 12.48% in the year.
Regarding the four products that influenced the result in the month (0.49 pp in 0.43%), there was an increase in prices in two of them: “polyvinyl chloride (PVC)” and “(high-impact or crystals) polystyrene”. However, “NPK-based fertilizers ” and “linear polyethylene, with density lower than 0.94” had, on average, a decrease in the prices. The other 35 products of the activity recorded a cumulative figure of -0.06 p.p.
Rubber and plastic: with a change of 2.75% of December prices against November, the sector had a cumulative annual change of 19.33%, the highest in the series, surpassing, this way, the end of the year 2018, when the prices had increased, on average, by 10.75%.
The highlight given to the sector is due to the fact that it was, in the December against November comparation, the third highest change among all activities of mining and quarrying and, in the same comparation, the fourth highest influence , 0.10 pp, in 0.41%.
The six highlights – two are, at the same time, highlights in terms of change and in terms of influence – are all from the group of “manufacture of plastic material”. It is worth mentioning that the two products accounting for the biggest weight in this group, “plastic films (including BOPP) for packaging” and “plastic bags for packaging or transportation” appear only among those that exerted the main influence. The four main influences account for 1.33 p.p., in 2.75%, that is, 1.42 p.p. is the influence from the other 17 plastic products and 10 rubber products.
In the opening by groups, the changes in “manufacture of plastic material” were above the sector average, both in the monthly index (3.09% against 2.75%) and in the cumulative index in the year (22.98% against 19.33%). The sector’s behavior was due to the increase of costs, by exchange rate, and to the difficulty in obtaining raw materials because of the problems triggered by the pandemic.
Basic metals: when comparing the average prices of December against November, there was a change of 1.65%, sixth consecutive positive change in the activity. With this result, basic metals had a cumulative change of 34.36% in the year, highest cumulative figure both in the end of the year and in the cumulative result in 12 months, in the entire IPP series that started in January 2010. Another highlight is that between December 2018 (current series base) and December 2020, prices of the sector had a cumulative change of 32.09%.
From the perspective of products that exerted highest influence on the monthly result, there was a contribution of 0.11 p.p. from the four most relevant products and of 1.54 p.p. from the other 20 products surveyed. The almost zero influence of the four most relevant products occurred due to the decrease of average prices of “gold for non-monetary uses” and of “aluminum oxide (calcined alumina)”, a drop that was balanced by the rise in prices of “aluminum plates and strips, more than 0.2 mm thick” and of “carbon steel hot coils, uncoated”.
In the cumulative index in the year, highlights are: “carbon steel hot coils, uncoated”, “Carbon steel ingots, blocks, billets or plates”, “gold for non-monetary uses” and “carbon steel rebars”, all of them with positive results.
The basic metals sector is a highlight, in the comparison with the 24 activities surveyed, for having the second highest price change in the year and the third highest influence on the monthly results and on the cumulative index in the year.