Producer prices in Brazil fall to the lowest in almost two years
Producer prices in May contracted from a 0.12% drop in the previous month, IBGE said in a statement, marking the sharpest fall this year and the biggest decline since a 2.72% drop in June 2023. May's data also marks a fourth straight month in the negative.
May saw a downward trend across most of the industry, according to IBGE, which added that so-called intermediate goods - products used in production such as iron ore and sugar - were the main driver in May.
IBGE's producer price index manager Murilo Alvim noted that lower commodity prices had contributed, resulting a lower cost of production, while a stronger Brazilian real had also helped reduce costs in some sectors for goods traded in U.S. dollars.
Since the start of 2025, producer prices in Latin America's largest economy shrank 1.97%, while in the accumulated reading for the 12 months through May hit 5.78%.
Brazil's central bank targets inflation at 3% plus or minus 1.5 percentage points.
Despite slowing down more than expected in May, inflation in the country still remains at 5.32% in the 12 months through May, IBGE data showed.
Even as prices have dipped, Brazil's central bank last month hiked its benchmark interest rate to 15% - its highest level in almost 20 years.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
an hour ago
- Telegraph
The Russian potato shortage that shows Putin's economy is on the brink
When the last leader of the Soviet Union visited Chequers for lunch with prime minister Margaret Thatcher in 1984, one topic of discussion was potatoes. Raisa Gorbachev, the wife of Soviet leader Mikhail, claimed Russia had 300 ways of cooking the humble spud, prompting Michael Jopling, Britain's agriculture minister, to express disbelief. She later posted a Russian cookbook to Jopling with the clarification: 'In fact, there are 500, rather than 300, recipes to cook potatoes.' For Vladimir Putin, Russians' appetite for the vegetable has become problematic, however. Shortages have pushed up prices by 167pc over the past year, the biggest rise of any food. 'It turns out that we don't have enough potatoes,' Putin admitted during a televised meeting in May, adding: 'I spoke with [Belarusian leader] Alexander Grigoryevich Lukashenko. He said, 'We've already sold everything to Russia.'' Since the invasion of Ukraine in 2022 made Russia the world's most sanctioned country, eagle-eyed economists have watched closely for signs of economic damage which have proved remarkably elusive. But now surging food prices and labour shortages are keeping inflation high, driving big cracks in the economy. 'We're basically already on the brink of falling into a recession,' economy minister Maxim Reshetnikov told a conference recently. Could Russia's well-oiled war machine be running out of steam? The strain is definitely starting to show, says Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center. 'Slowing economic growth coupled with high inflation leaves Russia close to stagflation,' says Prokopenko, a former adviser at Russia's central bank. It means Putin is vulnerable. Further falls in oil prices or a tightening of sanctions can now inflict far greater harm than they did previously, Prokopenko warns. 'None the less, we are not quite there yet,' she cautions. Another economist at a European bank, who didn't want to be named, said the waters were still muddied when it came to Russia's economy. 'The momentum is much slower than it used to be. If we look at the deficit, it has been widening. That suggests that despite the fiscal support, which is most likely aimed at military-related areas, the Russian economy is clearly not as robust as it used to be,' they said. In other words, Putin's war economy is likely at capacity: 'The potential to draw more people into the army and military production has been used. There is a limit to how many shifts people can work in factories, producing munitions and military uniforms.' As a result, inflation was running high at 9.9pc in May, fuelled by billions of roubles ploughed into the war effort, worker shortages and other price pressures. To quell it, interest rates are at 20pc, even after a one percentage point cut in June. 'The financial resources are not endless. The central bank, which maintains some sort of independence, has to maintain a very restrictive monetary policy. That lowers the availability of finance for the rest of the economy,' the economist adds. Still, experts caution against concluding this means all Russians must be struggling. Unemployment is hovering around record lows, high interest rates are boosting savings and mortgage borrowers are to some extent shielded. Wages have also surged. 'Yes, inflation has been high in the last three years, but nominal incomes have been growing much faster, therefore the average real wage actually increased quite substantially. I travel to Russia quite often, and there doesn't seem to be any discontent which is about to bubble to the surface,' says Tatiana Orlova, from Oxford Economics. She believes the economy minister's warning of recession was an attempt to cajole the central bank into cutting rates further – a more underhanded attempt than Donald Trump's frequent angry social media outbursts against Jerome Powell, the US Federal Reserve chief. She says that people in some sectors – teachers, doctors and others – will probably feel worse off because of high inflation. But the war has also created a big class of winners in poor towns across Russia. 'The families who are affected by the war because someone has joined the contractual army, for example, are using it as a social lift. The government is paying very high bonuses equivalent to between $20,000 [£14,600] and $35,000 just for signing up,' Orlova says. 'Those fighters are also receiving monthly wages, which are quite above average. So the families are suddenly able to afford more things. They can make a down payment for a new flat or buy a new car. It's a weird paradox that the war actually brought prosperity to families at this horrible cost,' she adds. This is echoed by the other economists who study the Russian economy. The country is experiencing the slow-burn effect of sanctions, but with very different impacts across the population. 'It's important to understand that the Russian households are not poor. The situation is far from catastrophic. The mood from now on will likely deteriorate because of the lack of new stimulus. These are the longer-term consequences of everything that the Russian government put upon itself in 2022,' said another economist. 'The politically liberal middle class that was formed in the early 2000s, which was mostly employed in the private sector, left the country in response to Putin's war. Since 2022, the new middle class has emerged among those beneficiaries [from the war], and they have been upscaling their consumption patterns,' they add. And this brings us back to potatoes. Prices of the beloved vegetable have surged because of poor harvests have reduced supply. They have only just started easing slightly. Bellwether of household finances Any sign of heightened popularity is worth watching: 'Potatoes are a Giffen good. That means if household wealth is going down, then some lower quality products such as potatoes see increasing demand,' the economist says. In other words, if people feel poorer they typically buy more potatoes, making it an unusual bellwether of household finances in a country with sparse reliable data. But says Andrey Sizov, a Russian commodity expert, other food types like butter, eggs and meat have also become much costlier after shortages. This may in fact reflect people trading up from potatoes. 'My speculation is that supply went down, and actually demand went down a little bit. Potatoes are not an expensive food. In the previous two years, it was first of all poor Russians who were making more money. So they could consume something else – less potatoes, more meat and butter, for example,' Sizov says. The humble spud's mixed signals underline that even as Russia's economy has lost momentum, some are feeling the gain and others the pain. But with the longer running toll from sanctions mounting and a costly war nearing its fourth anniversary, Putin has few options to trigger another growth spurt. 'The central bank could cut interest rates. But that would risk another surge in inflation. Another option is for the government to increase spending, but this is also more likely to increase prices than stimulate growth,' says Prokopenko, the former central bank adviser. 'Protectionism is yet another option. But this only works at the expense of consumers. In other words, it is ordinary Russians who will feel the consequences – through either increased prices, falling income, or less choice on the shelves,' she adds. Will the economic strain matter to Putin? He has been emboldened by a friendlier regime in the US under Trump administration, which has just paused some arms shipments to Kyiv. 'I do not see that the finances are at breaking point. This could go on for years,' warns Orlova. 'In Russia, people have very low expectations. They expect their life to be hard. They expect to always fight and find new ways of surviving. So it's just life as usual. When the population has very low expectations, it actually helps those who rule the country to do whatever they want,' she adds.
Reuters
2 hours ago
- Reuters
BRICS demand wealthy nations fund global climate transition
RIO DE JANEIRO, July 7 (Reuters) - Leaders of the BRICS group of developing nations prepared to address the shared challenges of climate change on Monday, the final day of their summit in Rio de Janeiro, demanding that wealthy nations fund global mitigation of greenhouse emissions. Brazilian President Luiz Inacio Lula da Silva has touted the importance of the Global South in tackling global warming as he prepares to host the United Nations climate summit in November. Still, a joint statement from BRICS leaders released on Sunday argued that fossil fuels will continue to play an important role in the global energy mix, particularly in developing economies. "We live in a moment of many contradictions in the whole world. The important thing is that we are willing to overcome these contradictions," Brazil's Environment Minister Marina Silva said on the sidelines of the summit, when asked about the plans to extract oil off the coast of the Amazon rainforest. In their joint statement, BRICS leaders underscored that providing climate finance "is a responsibility of developed countries towards developing countries," which is the standard position for emerging economies in global negotiations. Their declaration also mentioned the group's support for a fund that Brazil proposed to protect endangered forests - the Tropical Forests Forever Facility - as a way for emerging economies to fund climate change mitigation beyond the mandatory requirements imposed on wealthy nations by the 2015 Paris Agreement. China and the UAE signaled in meetings with Brazilian Finance Minister Fernando Haddad in Rio that they plan to invest in the fund, two sources with knowledge of the discussions told Reuters last week. The joint statement from BRICS leaders also blasted policies such as carbon border taxes and anti-deforestation laws, which Europe has recently adopted, for imposing what they called "discriminatory protectionist measures" under the pretext of environmental concerns. The opening of the BRICS summit on Sunday presented the bloc as a bastion of multilateral diplomacy in a fractured world and underscored the influence of 11 member nations that represent 40% of global output. Leaders also indirectly criticized U.S. military and trade policy, while pushing for the reform of multilateral institutions now largely run by Americans and Europeans. In his opening remarks at the meeting on Sunday, Brazilian President Luiz Inacio Lula da Silva drew a parallel with the Cold War's Non-Aligned Movement, a group of developing nations that resisted joining either side of a polarized global order. "BRICS is the heir to the Non-Aligned Movement," Lula told leaders. "With multilateralism under attack, our autonomy is in check once again." The Rio summit, the first to include Indonesia as a member, has showcased the rapid expansion of BRICS but raised questions about shared goals within its diverse group. In a joint statement published on Sunday, the BRICS condemned military attacks on Iran and Gaza, but stopped short of a unified position on which countries should have seats on a reformed United Nations Security Council. Only China and Russia supported adding Brazil and India to the council. Leaders including Indian Prime Minister Narendra Modi and South African President Cyril Ramaphosa gathered in Rio to discuss economic and geopolitical tensions. But the meeting's political weight was diminished by Chinese President Xi Jinping's decision to send Premier Li Qiang in his place.
Reuters
2 hours ago
- Reuters
Thai June headline CPI falls 0.25% y/y, below forecast
BANGKOK, July 7 (Reuters) - Thailand's headline consumer price index (THCPI=ECI), opens new tab dropped 0.25% in June from a year earlier, after the previous month's annual fall of 0.57%, the commerce ministry said on Monday. The figure compared with a forecast fall of 0.10% in a Reuters poll, and was below the central bank's target range of 1% to 3%. The core CPI (THCPIX=ECI), opens new tab, which excludes volatile fresh food and energy prices, rose 1.06% in June from a year earlier, compared with a forecast increase of 1.10%.
