Continued downturn in PPI
The producer price index (PPI) fell in June for the sixth month in a row. The downturn came both outside and inside the energy goods.
In total, PPI fell by 1.3 percent from May to June 2020. If one takes out the energy goods, the downturn in PPI was at 1.4 percent. The downturn in prices on energy goods a bit smaller, at 1.0 percent. The largest sector in energy goods is extraction, and the combined price index for extraction of crude oil and natural gas fell by 1.8 percent. However, there were differences, as the price on natural gas went down, while the price on crude oil went up. The price increase on oil can be explained by the decision by Russia and Saudi Arabia to resume their cooperation on stabilizing the market. In addition to this, comes an increased demand from China.
Small increase in manufacturing
One part of the energy goods that had an increase, was the refined petroleum products. The prices on these increased by 12.0 percent from May to June. This happened after three months of partly heavy price drops. The increase in the refining industry was decisive in for a small increase of 0.4 percent in manufacturing, as the index without these refined products ended up at a negative 0.5 percent. But there were differences in different industries here too. Of industries with a downturn in prices, one can mention the chemical industry and the metal industry. These had downturns of 1.4 percent and 3.2 percent, respectively.
On the side of the upturn, the mineral product industry had an increase in prices of 1.1 percent. A smaller industry, the beverage industry, had a much larger increase at 5.7 percent. Several breweries report increased prices now that restaurants and bars are almost fully operational, after a partial lockdown due to the coronavirus pandemic.
Figure 1. Price index. 2015=100
Continued low electricity prices
The prices on electricity fell in June, after a short-term increase in May. A high degree of magazine fillings, and a lowered exchange capacity due to an error on the Skagerak-connection (in Norwegian) were contributary to the low prices. The only thing that dampened the total downturn in electricity prices, were the almost unchanged prices for rents on distribution. The total change in prices on electricity, gas and steam ended up at a negative 8.5 percent.
[Electricity, gas and steam: In Norway, production and distribution of electricity are the principal parts of this group]