IGP-M falls more than expected in June due to a drop in raw materials, says FGV.
The index calculates producer, consumer, and construction prices between the 21th of the previous month and the 20th of the reference month.
Reuters - The General Market Price Index (IGP-M) fell more than expected in June, to 1,67%, after registering a drop of 0,49% in the previous month, with a notable decline in raw material prices, according to data released by the Getulio Vargas Foundation (FGV) this Friday.
Analysts polled by Reuters had expected a 1,02% decline. With this month's result, the index has now accumulated a 4,39% increase over the past 12 months.
The Broad Producer Price Index (IPA), which accounts for 60% of the overall index and measures the variation in wholesale prices, plummeted 2,53% in June, after having registered a drop of 0,82% in the previous month.
"The sharp drop in the IPA was mainly influenced by agricultural products, with declines in 21 of the 27 items that make up the group," explained Matheus Dias, an economist at FGV IBRE.
"In general, the progress of the harvests has fueled expectations of greater supply, putting downward pressure on prices for both producers and retailers," he added.
The most notable highlight of the IPA was the rate for the Raw Materials stage, which fell 4,68% in June, extending the 2,06% drop seen in May.
The items that contributed most to the IPA result were corn (-16,93%, compared to -9,79%), coffee beans (-11,01%, compared to +1,18%), soybean meal (-9,75%, compared to +3,25%) and iron ore (-4,96% compared to -2,30%).
Meanwhile, the Consumer Price Index (CPI), which has a 30% weighting in the overall index, slowed to a 0,22% increase in June, from a 0,37% increase in the previous month.
"In retail, consumer prices also reflected the more widespread drop in food prices, especially for fresh produce," said Dias.
The most notable declines in the CPI were in the following items: tomatoes (-7,20%, compared to -4,78%), eggs (-7,60%, compared to -3,18%), and papaya (-11,28%, compared to +3,06%).
The National Construction Cost Index (INCC), in turn, rose 0,96% in June, above the 0,26% increase in May.
The IGP-M calculates producer, consumer and construction prices between the 21st of the previous month and the 20th of the reference month.
