Producer prices with the first impacts due to the conflict in Ukraine


Producer prices hint at the impact of the conflict in Ukraine. According to the latest data from the National Institute of Statistics and Geography (Inegi), these prices showed an escalation last February, after a slowdown in January.

The National Producer Price Index (INPP), including oil, presented a monthly advance of 1.42%, while at an annual rate it stood at a level of 9.83 percent. This represented the highest level, for a February, since 2017, when in the second month of the year these prices increased 11.52 percent.

“Producer prices point to the impact of Russia and Ukraine. These rebounded from 9.70 to 9.83% annually in February, due to increases in the price of raw materials such as corn, wheat, soybeans, oil and other inputs, such as fertilizers, due to geopolitical tensions,” said Alejandro Saldaña, deputy director of Economic Analysis at Go for More (Bx+).

Meanwhile, Gabriela Siller, director of Economic and Financial Analysis at Banco Base, pointed out that since October 2021 the differential between producer and consumer inflation is above 2%, which shows that despite the pressures on rise in intermediate prices, the pass-through to consumer prices has been limited.

“On the one hand, this is due to the slow economic recovery. However, because the increase in producer prices is continuous, in several industries it becomes unsustainable to avoid transferring the higher costs of production to the price of final goods”, he added.

Russia’s invasion of Ukraine, which took place in the last days of February, but whose tensions had been going on for days, led to the prices of raw materials and oil soaring to highs not seen for years.

For example, at the end of February, the Mexican oil mix was quoted at 88.81 dollars per barrel, against the 70.90 dollars at the beginning of the year, while in the first days of March it had already exceeded 100 dollars.

Meanwhile, wheat, for example, from January 21 to March 3, showed a rise in its price of 21.17%, and in the period it reached a maximum of 11.34 dollars per bushel, which has not been seen since 2008.

Primary activities increase price by 15.12%

By group of economic activities, the primary sector that is dedicated to agriculture, hunting, fishing, and the like, presented an increase in its prices of 15.12% in annual comparison, while at a monthly rate the increase was 1.62 percent.

Secondary activities, on the other hand, showed an increase of 12.21% per year, and 1.77% per month. Inside, in the annual comparison it was observed that the mining sector faced increases of 33.29%, while the construction industry of 13.97 percent.

Meanwhile, the manufacturing industries saw an increase in price by 9.99%, and the generation, transmission and distribution of electricity, water and gas by 4.67 percent.

Tertiary activities, on the other hand, showed an annual producer inflation of 4.46% in February, and 0.69% in monthly comparison. Within this sector, the service that showed the highest annual inflation rate was temporary accommodation and food and beverage preparation, with 11.51 percent.

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