The producer prices index (PPI) fell by 1.5% y/y in September, moderating from 1.9% y/y a month earlier, according to preliminary data of the statistical office released today. That was the lowest decrease of the index recorded this year, sustained by milder price falls in both domestic and external segments. The deflation on the external segment remains milder. The industrial prices slightly rose in monthly terms, following two consecutive months on the fall. The monthly increase was exclusively sustained by the price pick-up on the domestic market.
Looking at the detailed prints we note that the same groups contributed to keeping the producer prices in the negative territory in Sep like in the previous months, namely the energy and intermediate goods groups. In addition, the capital goods prices edged down y/y in September. Likewise, durable goods inflation remained the strongest among all main industrial groups, in line with demand recovery for those types of goods. In the other breakdown, by main industrial segments, the major deflationary impact came no longer from the utilities segment, where the PPI decrease softened to 5.5% from 6.6% y/y a month before. Still, the deflation remained strong in that segment, which continued to remain affected by decreasing prices for electricity and gas. Prices in mining reported the strongest annual fall in September, notably steepening compared to the previous periods. In fact, the PPI deflation in mining was the strongest this year, most probably because cheaper gas is replacing coal in energy generators. Meanwhile, manufacturing PPI fell by 0.4% y/y in September, keeping on the moderation trend. Actually, the industrial price annual decrease was the mildest recorded this year and even stepped on a slight upward trend in monthly terms, which might indicate some demand recovery in the segment. The manufacturing sub-segments that mainly triggered PPI fall moderation in September were leather, beverages, apparel and tobacco, which reported the strongest annual price increases in September, most probably sustained by domestic demand rebound. However, the prices of manufacturing sub-segments affected by weakening exports and falling energy prices such as refining, chemical, metallurgy continued falling y/y in the month, but with milder paces than a period earlier.