Natural gas prices pulled down the PPI
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.
Downward trending prices on extraction related services
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
|Extraction related services||Manufacturing total|