Producer costs have the largest drop since 2014 in August

Producer prices in Brazil had a record drop in August in the series started in 2014, of 3.11%, strongly influenced by the decline in prices in the oil refining and biofuels industry, informed the IBGE (Brazilian Institute of Geography and Statistics) this Wednesday (28).

The result took the index accumulated in 12 months to a high of 12.16%. In July, the IPP (Producer Price Index) had risen 1.13% compared to June.

The fall in producer prices was influenced by the reduction in the prices of crude oil and iron ore in the foreign market, according to the IBGE.

Among the activities analyzed, the IBGE pointed out that the greatest weight was exerted by the drop of 6.99% in oil refining and biofuels, while extractive industries showed a decline of 14.18%.

Also noteworthy in the month were drops in metallurgy costs (-3.91%); and food (-3.74%).

“The drop in crude oil will have a direct effect on refining and other chemical products, in addition to the indirect effects on other chains with the drop in fuel prices. On the other hand, when prices fall, iron ore affects the metallurgy sectors, particularly steel, which, in turn, will reach sectors such as the production of vehicles and household appliances”, said Alexandre Brandão, IPP manager.

The IPP measures the variation in prices of products at the “factory door”, that is, without taxes and freight, of 24 activities in the extractive and transformation industries.

(Reuters)