Natural gas prices pulled down the PPI

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The producer price index (PPI) fell for the fifth month in a row from June to July. This time it was lower prices on natural gas that were the most important contributor.

The prices of natural gas went down by over 9 per cent which was enough to send the Producer price index total down. The price development on natural gas is highly affected by season. When there are low temperatures in Europe, the demand increases and so does the prices. Thus, lower prices on natural gas during summertime are not abnormal. The price of crude oil, however, went slightly up from June to July.

Prices on services related to oil- and gas extraction have mostly been trending downwards for the last two years. From July last year to July this year, prices have fallen by over 20 per cent. The oil price-drop in the fall of 2014 and onwards are an important contributing factor, although with some time lag. This has led to lower demand after extraction services over time which again has led to more available rigs and boats than earlier. This means that the prices, in many cases, on newly signed contracts are lower than earlier.

Figure 1. Price indices. 2014=100
Figure 1. Price indices. 2014=100
Extraction related services Manufacturing total
Jan. 2014 98.89 99.92
Feb. 2014 99.38 99.93
March 2014 99.52 99.39
April 2014 99.83 99.47
May 2014 99.5 99.54
June 2014 98.12 100.09
July 2014 101.14 100.7
Aug. 2014 100.25 101.15
Sept. 2014 99.08 100.56
Oct. 2014 100.8 100.31
Nov. 2014 101.38 99.95
Dec. 2014 102.13 99
Jan. 2015 102.97 97.5
Feb. 2015 101.39 98.36
March 2015 102.56 99.11
April 2015 102.04 99.36
May 2015 99.09 99.51
June 2015 98.97 99.65
July 2015 98.73 99.75
Aug. 2015 99.21 98.61
Sept. 2015 99.49 97.42
Oct. 2015 99.29 97.83
Nov. 2015 99.74 98.41
Dec. 2015 99.95 97.4
Jan. 2016 96.92 96.11
Feb. 2016 96.69 95.44
March 2016 96.84 95.66
April 2016 96.47 96.41
May 2016 96.38 97.81
June 2016 94.52 98.95
July 2016 90.09 100.25
Aug. 2016 90.16 99.09
Sept. 2016 86.89 98.61
Oct. 2016 81.87 99.11
Nov. 2016 79.92 99.94
Dec. 2016 80.02 100.64
Jan. 2017 77.21 102.64
Feb. 2017 78.46 104.55
March 2017 74.41 104.03
April 2017 75.04 104.33
May 2017 74.06 104.2
June 2017 70.79 103.52
July 2017 71.26 102.95

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