Brazil producer price inflation 3.28% in August, highest since Jan, 2014

By Jamie McGeever

BRASILIA, Sept 29 (Reuters)Brazil’s producer price index (PPI) rose 3.28% in August, figures showed on Tuesday, the highest in six and a half years as food and oil refining and biofuel-related prices rose sharply.

For the first time since the index was launched, all 24 mining-related and manufacturing activities surveyed showed rising prices, government statistics agency IBGE said.

The 3.28% monthly rise followed a 3.22% increase in July, and was the biggest monthly gain since January, 2014, IBGE said.

It brought producer price inflation in Brazil in the first eight months of this year up to 10.8%, and in the 12 months to August it was running at 13.7%, IBGE said.

Food prices, which have the biggest single weighting in the index, rose 4.1% in the month, IBGE said. Food prices are up 16.5% so far this year, and compared with August last year they are 27.5% higher.

Food prices accounted for 1 percentage point of the monthly rise in the broader index, IBGE said.

Oil and alcohol refining products rose 6.2% in price from July, accounting for a 0.5 percentage point weighing in the wider index’s rise, and mining accounted for 0.4 percentage point.

The central bank last week highlighted in its Quarterly Inflation Report that there is a widening divergence between rising producer price inflation and lower consumer price inflation, largely down to the recent rise in fuel prices.

The central bank said the real’s depreciation so far this year, currently almost 30%, and the recent recovery in commodity prices has had an “intense” impact on producer prices.

Exported goods and commodities such as soybeans and iron ore have a considerable weight in the producer price index, the central bank noted. That index does not include services, which have a significant weight in household consumption and whose prices have slumped to historic lows recently.

(Reporting by Jamie McGeever Editing by Chizu Nomiyama)

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