Brazilian industry facing higher input prices

Photo: Alf Ribeiro/Shutterstock

Monthly input costs for Brazilian industry rose by 1 percent last month, according to the latest producer price index. This economic gauge — known in Brazil as “industrial inflation” — showed a deceleration in price increases for basic products both on a monthly and yearly basis. The index stood at 1.8 percent in May, and 1.29 percent 12 months ago.

Year-to-date, prices have risen 10.12 percent, and 18.78 percent in the last 12 months.

Of the 24 industries surveyed by Brazil’s official statistics agency, 15 saw an all-time high in prices in June. The natural gas, food, and printing industries faced the most notable price hikes.

In the oil and biofuel sector, last month’s 4.05-percent inflation was largely attributed to the war in Ukraine and the subsequent rise in crude oil costs.

With prices at the pump hitting Brazilians hard, the government has taken steps to alter Petrobras’ pricing policies. The state-owned oil and gas giant has also announced that it will lower the price of gasoline by 3.9 percent only a week after it reduced the same figure by 5 percent, the first time it did so this year.

As for foodstuffs, regional droughts and natural off-seasons have caused inflation in the industry to reach 1.99 percent. With dairy products seeing a 14.91-percent increase in prices last month, the basic basket of food necessities has now surpassed the minimum wage on a nationwide average.

Such trends in the sector can also be attributed to the exchange rate — with the U.S. Dollar gaining strength — and the rise in foreign demand for several food products.

On the other hand, the mining and extraction industry saw a significant 2.89 percent drop in prices this month as lower demand for steel offset the rise of crude oil. Purchases of the former have slowed down, with economic activities halting in China through its strict coronavirus policies and deceleration in Europe and the U.S.