The Producer Price Index recorded a change of -0.43% in February in comparison with the previous month - below the 0.30% recorded in January. Among the 24 activities of the mining and quarrying and manufacturing industries, 11 presented positive price changes, against ten of the previous month. The cumulative index of the year reached -0.13%, against 0.30% in January. The cumulative indicator in 12 months was 1.54%, against 1.34% in January.

The Producer Price Index (IPP) of the Mining and Quarrying and Manufacturing Industries measures the price evolution of products 'at the factory gate', without taxes and freight, and comprises information of the major economic categories, i. e., capital goods, intermediate goods and consumer goods (durable and semi- and non-durable). The complete publication of the IPP can be accessed here.

Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria

In February of 2017, the price change of -0.43% over January had the following impact among the Major Economic Categories: -0.30% in capital goods; -0.36% in intermediate goods; and -0.58% in consumer goods. The change seen in durable goods was 0.00% and in semi-and non-durable goods, -0.76%.

The influence of the major economic categories was: -0.03 p.p. in capital goods, -0.20 p.p. in intermediate goods and -0.21 p.p. in consumer goods. In the case of consumer goods, -0.21 p.p. was due to price changes in semi-durable and non-durable goods and 0.00 p.p. in durable consumer goods.

In the cumulative perspective in the year (current month against same month a year ago), the price changes of industry accumulated, up to February, change of -0.13%. The change in capital goods was-0.48% (with influence of -0.04 p.p.), 0.58% was attributed to intermediate goods (0,32 p.p.) and 1.16% in consumer goods (0.41 p.p.). In the latter case, the increase was influenced on 0.06 p.p. by products in durable consumer goods and on -0.47 p.p., by the semi-durable and non-durable consumer goods.

In the cumulative index over 12 months, the industry price change reached, in February, 1.54%, with the following changes: capital goods, -2.81% (-0.25 p.p.); intermediate goods, 1.73% (0.97 p.p.); and consumer goods, 2.33% (0.82 p.p.), with the influence of durable consumer goods at 0.20 p.p. and that of semi-and non-durable consumer goods at 0.62 p.p.

Eleven of the 24 industrial activities had price rise

Source: IBGE, Diretoria de Pesquisas, Coordenação de Indústria

In February/2017, among the 24 activities of the mining and quarrying and manufacturing industries, 11 presented positive price changes, against ten of the previous month. The four major changes observed inFebruary/2017 occurred among products included in the following industrial activities: mining and quarrying industries (-5.06%), basic metals (2.96%), printing (-2.29%) and tobacco (-2.01%).

In terms of influence, in the comparison between February/2017 and January/2017 (-0.43%), the highlights were food (-0.27 p.p.), basic metals (0.22 p.p.), mining and quarrying industries (-0.19 p.p.) andoil refining and ethanol products (-0.14 p.p.).

The cumulative index in the year (February/2017 against December 2016) reached -0.13%, over 0.30% inJanuary/2017. Among the activities that, in February/2017, had the biggest percentage changes in the index, the highlights were: basic metals (5.62%), tobacco (-5.41%), other transportation equipment(-4.33%) and oil refining and ethanol products (4.19%). In this indicator, the most influential sectors were: food products (-0.75 p.p.), oil refining and ethanol products (0.42 p.p.), basic metals (0.41 p.p.) and other chemicals (0.13 p.p.).

The cumulative indicator in 12 months changed 1.54%, against 1.34% in January/2017. The four major price changes occurred in mining and quarrying industries  (52.92%), other transportation equipment(-15.29%), tobacco (-14.44%) and printing (10.87%). Concerning this indicator, the sectors of greatest influence were: mining and quarrying industries (1.24 p.p.), other chemical products (-0.93 p.p.), basic metals (0.75 p.p.) and food (0.60 p.p.).

Next are the sectors that were among the four main influences in February of 2017, in the three comparisons: monthly, cumulative index in the year and cumulative index in the 12 months.

Mining and quarrying industries: in February 2017, the activity's prices changed negatively (-5.06%), in relation to January. This was the greatest monthly price change seen in the activities surveyed. The prices of the activities mining and quarrying exerted a negative influence on the result of the mining and quarrying industries advance of -0.19 p.p. (in -0.43%).

With this result of the monthly change, the prices of the mining and quarrying industries accumulated a drop (-3.11%) in the first two months of the year.

In the comparison with February 2016, the prices of the mining and quarrying industries stood out as the main positive change (52.92%) among all activities and also the main influence (1.24 p.p. in 1.54%).

All the analyzed products in the activity presented a negative change in relation to month and in the cumulative index of the year.

Food: with the change of -1.31% occurred between January and February, the sector accumulated, in these two months, -3.51% of average change of prices in its products. The prices, in the comparison with the same month of 2016, were 2.96% higher in February this year.

In terms of influence, the sector stands out in all indicators: it is the first both in month on month (-0.27 p.p. in -0.43% of the mining and quarrying and manufacturing industries) and in the cumulative index of the month (-0.75 p.p. in -0.13%) and the fourth in comparison with February 2016 (0.60 p.p. in 1.54%).

Two products stand out in the change of February over January, both in the main changes and in the main influences. They are: “refined soybean oil” and “crude soybean oil, even degummed”. Among the main influences, all highlighted changes were negative and added up to -1.30 p.p. (in -1.31%). The two other products are: “cooled or fresh beef” and “crystallized sugar”.

The drop in sugar prices, even during the sugarcane off season, specially the crystallized type, was related to a weak demand, in a context of balanced stocks. Coupled with this, once more, is the appreciation of the real over the dollar (nearly 3%), which has had a particular impact in the exports of the demerara and VHP types. In the case of 'cooled or fresh beef', the price drop is attributed to a decreasing demand (in the domestic market) and to the appreciation of the real currency (foreign).

Oil refining and ethanol products: in February against January, reversing the signal of the previous month, the sector's prices changed by -1.28%, and, as a result, the cumulative index fell from 5.54% to 4.19%. In the comparison with the same month a year ago, the change was of 5.52%, the biggest result since November 2015 (5.67%).

The highlight given to the sector is due to the influence of the month on month indicator (fourth greatest influence, in bulk, -0.14 p.p. in -0.43% of the mining and quarrying and manufacturing industries), and, of the cumulative indicator, becoming the fourth highest change and the second greatest influence (0.42 p.p. in 0.13%) - always in bulk.

Other chemical products: the chemical industry in the month of February recorded an average price change, in relation to January, of -0.11%, after five months in a row of price recovery, which was not enough to offset the negative result of the last 12 months (-8.90%). The fall is related to the results of the international prices and to the costs of the raw material, both with influence of the real currency appreciation over the dollar of 21.9% in the last 12 months and 7.4% just in the first two months of the year. It is also important to mention the price movement of the oil derivatives, especially naphthas, as well as the results of the ammonium price change.

Of note is that the four products of greater influence in the month on month indicator ('NPK manure and fertilizers'', 'herbicides for agricultural purposes', 'pesticides for agricultural purposes' and 'polypropylene') represented a negative result of 0.44 p.p. in the change result of -0.11% in the month, i.e., the other 28 products contributed positively with 0.33 p.p.

Basic metals: comparing the sector's price in February 2017 against January 2017, the continuity of the price rises recorded since November 2016 can be observed, reaching a positive average change of prices of 2.96% (the greatest change among the survey's activities) and , thus, accumulating in the last 12 months a positive change of 10.55% and in the year of 5.62%.

Among the highlights, both in terms of change and of influence, in the comparison with January, are: 'uncoated cold-rolled carbon steel coils', 'carbon steel ingots, blocks, billets and plates', and 'seamless steel tubes'. The product “uncoated thick carbon steel plates” is a highlight in terms of “uncoated carbon steel hot-rolled coils” in terms of influence.

As to the products that mostly influenced the long-term results (cumulative index in the year and cumulative in 12 months), there are three in common: 'uncoated cold-rolled carbon steel  coils', 'hot- and cold-rolled carbon steel coils, uncoated', 'carbon steel ingots, blocks, billets and plates'. “Stainless steel coil or sheet, including strips” is the highlight lacking in the cumulative index in the year' and “unwrought non-alloy aluminum” closes the list of the four main influences in the cumulative index in the 12 months, the only case of negative value.

The behavior of the sector is influenced by the combination of the results from basic metals (related steel products) and from non-ferrous materials (copper and aluminum), which, on their turn, present very distinguished behaviors. The basic metal group is affected by the steel capacity surplus in the world, even after the steel production reduction effort in China coupled with the energy and natural gas cost, not to mention the price advance of iron ores in the international market (the price change of the mining and quarrying sector in the last 12 months was nearly 53%). The second group, however, presents prices linked to the international exchange market and the dollar variations.

The four products previously mentioned as the most influential ones in the results of the comparison with the previous month represented 1.98 p.p. of the 2.96% change in February in relation to January.