Industrial prices changed -0.18% in December 2023 over November, accumulating a drop of 4.98% in the year, the lowest cumulative value in the year up to December since the beginning of the time series in 2014. That value was nearly eight percentage points (pp) lower than that registered by the cumulative index in 2022, a dynamics followed by eight out of 24 industrial activities investigated by the survey.

In December, the prices of 12 out of 24 industrial activities investigated registered negative changes over the previous month.

The Producer Price Index - IPP of the Mining and Manufacturing Industries measures the evolution of the prices of products "at the factory gate", free from taxes and freight, and encompasses information by major economic category, i.e., capital goods, intermediate goods and consumer goods (durable and semi and non-durable).

In December 2023, the prices of the mining and manufacturing industries (IPP), or, alternatively, general industry (IG), changed–0.18% when compared with those of November 2023. Between October and November, industry had dropped 0.34%.

In December 2023, 12 out of 24 industrial activities investigated retreated their prices against November. The four activities with the highest changes were: petroleum refining and biofuels (-4.05%), mining and quarrying industries (2.30%), pulp and paper (2.01%) and toiletries, soaps and cleaning products (1.50%).

The sector of petroleum refining and biofuels was the biggest highlight, responsible for -0.45 percentage points (pp) of influence in the change of the overall industry (-0.18%). Other activities that also stood out were food products (0.14 pp of influence), mining and quarrying industries (-0.11 pp) and other chemicals (-0.09 pp).

The cumulative index in the year hit -4.98%, against -4.80% in November. Therefore, the IPP closed 2023 with the lowest cumulative value in the year up to December since the beginning of the time series in 2014. That value was nearly 8 percentage points (pp) lower than that registered by the cumulative index in 2022, a dynamics followed by eight out of 24 industrial activities investigated by the survey.

Among the highest changes in the year, the highlights were: other chemicals (-17.25%), petroleum refining and biofuels (-15.45%), pulp and paper (-15.23%) and basic metals (-9.77%).

On the other hand, the major influences were petroleum refining and biofuels (-1.85 pp), other chemicals (-1.51 pp), basic metals (-0.60 pp) and food products (-0.60 pp).

Among the broad economic categories, the price changes in December against November were: -0.27% in capital goods (BK), -0.49% in intermediate goods (BI), and 0.31% in consumer goods (BC), being the change reported in durable consumer goods (BCD) of -0.11% and that in semi and non-durable consumer goods (BCND) of 0.40%.

Intermediate goods was the major influence among the broad economic categories, with a weight of 55.63% in the overall index and accounting for -0.27 pp of the change of -0.18% in the mining and manufacturing industries.  Consumer goods influenced 0.11 pp and capital goods, -0.02 pp. In the case of consumer goods, the influence reported in December was split into -0.01 pp, due to the change in the prices of durable consumer goods, and 0.12 pp, due to the change in semi and non-durable consumer goods.

The cumulative index in the year of the broad economic categories were: capital goods (-1.62%); intermediate goods (-7.87%) and consumer goods (-0.96%), being 2.37% for durable consumer goods and -1.61% for semi and non-durable consumer goods.

In terms of influence on the cumulative result in the year, capital goods accounted for -0.12 pp of the rate of -4.98% registered by the overall industry up to December this year. Intermediate goods accounted for –4.52 pp, whereas consumer goods accounted for -0.34 pp in the aggregated result of industry, an influence shared into 0.14 pp due to changes in durable consumer goods and -0.47 pp due to changes in semi durable and non-durable consumer goods.

The following sectors stood out:

Mining and quarrying industries: after dropping between October and November (-7.09%), the price change in this sector returned to the positive side (2.30%), repeating a scenario noticed in nine months of the year. As a result, it closed 2023 with a change of 9.12%, a scenario different from that in 2022, when it had closed with a change of -7.92%.

Comparing the prices in December against November, this sector recorded the second highest change (in module) and the third biggest influence (0.11 pp out of -0.18%).

“Iron ore and their concentrates, except pelleted or sintered”, the product with the highest weight in this sector (44.50%), was the major influence in all indicators. In all indicators, while the influence of products of “extraction of iron ore” was positive, that of products of “extraction of petroleum and natural gas” was negative.

Food products: for the fourth consecutive month, the prices in this sector registered a positive change over the immediately previous month, now at 0.58%. As a result, the cumulative index in the year closed at -2.47%, a different scenario from that noticed in 2022, when the change along the year had been 5.03%. Up to June, the cumulative index in the year was -4.99% and, in the second semester, the drop movement was relieved in the last four months, since the cumulative rate between September and December was 3.91%.

This sector exerted the second biggest influence in the monthly comparison (0.14 pp out of -0.18%) and the fourth one in the cumulative rate in the year (-0.60 pp out of -4.98%).

“Semi-milled or milled rice, whether or not polished or burnished” leveraged the rise reported this month, being a highlight both in terms of change and influence. In the case of influence, the indicator that compares December and November of the other three products, “residue of soybean oil extraction”, “frozen poultry and giblets” and “VHP sugar (very high polarization)”, showed that only the first one recorded a negative change. In any case, the joint influence of the four highlighted products was of 0.55 pp out of 0.58%.

The rise in the price of rice was due to off-season, which makes the more expensive for the industry. The increase in the foreign demand partly explained the increase of sugar and Holiday Seasons are an important component in the price of chicken. On the other hand, the drop registered in “residue of soybean oil extraction” was in line with the robust supply of this grain in the foreign market.

Petroleum refining and biofuels: after four consecutive months of rising prices (it accumulated 18.40% between August and November), the price change in this sector returned to the negative side (-4.05%). As a result, in a year in which the changes were negative in eight months, the cumulative index in the year or in 12 months stayed at -15.45%, a different scenario from that of 2022, when the year closed with a change of 11.04%.

This sector stood out in every indicator. It was the highest change and the the biggest influence (-0.45 pp out of -0.18%) in the monthly comparison, the second highest change in the cumulative index and, still in this indicator, the first influence (-1.85 pp out of -4.98%).

In terms of influence, “diesel fuel” - the product with the highest weight in this sector in December (47.43%) - was the major one in every indicator.

Other chemicals: the chemical industry closed the year with prices 17.25% cheaper than those in December 2022. The deflationary dynamics highlighted this sector in terms of influence on the IPP result, which also closed 2023 with the lowest prices in 12 months. Of the rate of -4.98% of the overall industry accumulated in the year, -1.51 pp was due to the prices of chemicals, an influence that was only smaller than that of the sector of refining.

Chemicals have the fourth highest weight in the IPP and its influence also stood out in the result against the immediately previous month. With prices 1.12% lower than those in November, this sector accounted for -0.09 pp out of the change of -0.18% of the overall index (the fourth biggest influence).

In the short term, pesticides stood out unlike the sectoral result over November, by rising and somehow offsetting the reduction in the prices perceived in that month. With lower prices in December, fertilizers and petrochemicals established the signal of the change recorded in the aggregate.

Basic metals: in December, price change in this activity was of 0.47% in relation to the previous month, interrupting a series of seven consecutive negative figures of this indicator. Despite the rise noticed in December, the prices accumulated, on average, a drop of 9.77% in 2023, being the fourth most intense change among the 24 activities surveyed by the IPP, as well as the third major influence in this indicator (-0.60 pp out of -4.98%).

During the year, this sector was mainly influenced by the economic groups of non-ferrous metals and steel. The second group followed the sector and rose 0.83% in December against November. Like the sector, the cumulative change in the year remained on the negative side, with a cumulative drop of 10.60% in 2023.

It is worth highlighting that the steel group has been mainly affected by the low domestic demand for steel products and by the need to maintain competitive prices due to the higher volume of imports and to the prices of iron ore. On the other hand, the changes in the group of non-ferrous metals are usually linked to the quotations in the international stock markets and have been mainly influenced by changes in the quotation of aluminum, as well as by the currency rate (in 2023, the dollar registered a cumulative drop of 6.6% against the real).