Brazil’s Industrial Prices Rebound with a 0.92% Increase in August

In August 2023, Brazil’s Industrial Producer Price Index (IPP) rose by 0.92%, marking a positive shift after six consecutive months of decline. Among the 24 industrial activities surveyed, 12 showed positive price variations. However, the year-to-date cumulative change reached -6.32%, the most significant negative variation for an August since 2014. The 12-month cumulative change stood at -10.51%.

Key Highlights:

  • The top performers in August were petroleum refining and biofuels (7.52%), mining (6.56%), apparel (5.89%), and information technology, electronic products, and optics (-2.79%).
  • Petroleum refining and biofuels had a substantial impact, contributing 0.72 percentage points to the overall 0.92% increase.
  • The year-to-date variation showed declines in key sectors, with petroleum refining and biofuels (-19.98%), chemicals (-17.35%), paper and pulp (-16.89%), and apparel (15.47%).
  • In the 12-month comparison, the most significant variations were observed in chemicals (-30.75%), petroleum refining and biofuels (-29.75%), apparel (17.65%), and metallurgy (-14.09%).

Sectoral Analysis:

  1. Petroleum Refining and Biofuels: After eight consecutive months of decline, prices surged by 7.52%, contributing significantly to the overall increase. The year-to-date cumulative change improved from -25.58% to -19.98%.
  2. Chemicals: Prices in the chemical industry saw a 1.02% increase after 13 months, reflecting positive market dynamics, especially in the fertilizer segment.
  3. Metallurgy: Prices in metallurgy dropped by 2.67% in August, marking the fourth consecutive monthly decline. The sector has experienced a cumulative decrease of 7.45% in 2023 and 14.09% in the last 12 months.
  4. Mining: Mining activities witnessed a notable increase of 6.56% in August, contributing positively to the IPP. The year-to-date cumulative change shifted to 5.02%.
  5. Apparel: The apparel sector demonstrated robust performance with a 5.89% increase in August, resulting in a positive year-to-date change of 15.47%.

Economic Categories:

  • In August, capital goods showed a minimal 0.04% variation, while intermediate goods increased by 1.54%, and consumer goods rose by 0.18%. Durable consumer goods increased by 0.16%, whereas semi-durable and non-durable consumer goods rose by 0.18%.
  • Capital goods, with an 0.04% increase, had a marginal influence on the overall IPP variation.

Global Factors:

  • The industry is influenced by global factors such as commodity prices and exchange rates. The appreciation of the dollar against the real impacted prices.
  • The fluctuation in prices reflects global trends, with sectors like petroleum refining responding to changes in international commodity markets.

The rebound in industrial prices in August brings a positive outlook after a prolonged period of decline, although challenges persist amid global economic dynamics.