High in oil refining causes prices to soar in October to a 6-month high

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Oil refining costs weighed heavily and producer prices in Brazil accelerated to a 2.16% rise in October, the strongest in six months, according to data released this Wednesday by the Brazilian Institute of Geography and Statistics (IBGE).

In September, the Producer Price Index (IPP) had risen 0.25%, and the October result is the strongest since April (+2.19, marking a series of more than two years of inflation in the industry — the last negative rate of the IPP was in August 2019.

The result of October leads the index to accumulate in 12 months advance of 28.83%.

Among the 24 activities analyzed, the IBGE pointed out that 22 increased in October, with emphasis on petroleum refining and alcohol products (7.14%).

“This rate reflects the variation in crude oil, whose price has been increasing on the international market,” explained the research manager, Alexandre Brandão. Activity accumulates in the year high 60.38%, the highest rate for October since the beginning of the historical series, in 2014.

The 6.38% increase in the activity of other chemical products also weighed heavily, mainly linked to international prices and the cost of various raw materials, such as naphtha. In addition, industry demand for chemical products is heated, according to the IBGE.

“It is a sector directly affected by oil refining. So, the increase in refining ends up pulling the result of other chemical products”, explained Brandão.

The IPP measures the variation in product prices at the “factory door”, that is, excluding taxes and freight, of 24 activities in the extractive and manufacturing industries.

Reference: CNN Brasil

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