Downturn in export prices in February
The producer price index (PPI) fell by 3.3 per cent from January to February. Reduced export prices on oil and gas had the largest impact, but reduced electricity prices were another contributing factor.
Due to Easter holidays, the producer price index for March will be published at April 8th.
In total, PPI fell by 3.3 per cent from January to February 2020. The downturn was largest at the export market, with a price drop of 5.7 per cent, while the prices on the domestic market fell by 0.9 per cent. PPI without energy goods rose by 1.1 per cent.
Reduced export prices in February
The reduced export prices mainly came as a result of falling prices on crude oil and natural gas, which combined fell by around 11 per cent. The price on Brent Blend stood at about 50 USD per barrel at the end of February, and measured in NOK, fell by around 9 per cent from January. This downturn came in a time where the market fears the Corona virus, and the global demand of oil has fallen for the first time in over ten years. It is estimated that the virus alone has reduced February’s oil comsumption in China by about 25 per cent. The Norwegian krone further weakened against US dollars in Februar, and may have contributed to a dampening of the price fall in export goods from Norway.
Unusual winter sends gas prices down
The price on natural gas fell considerably in February. The prices are affected by circumstances at the global market. In Asia, gas prices fell to record breaking lows due to fears of a Corona-induced drop in demand. Another contributor has been the relatively warm winter, according to Bloomberg.
Figure 1. Price index. 2015=100
|PPI total||Crude oil||Natural gas|
Lowest electricity prices in twenty years
The mild and somewhat rainy weather, lead to low consumption of electricity in February. The consequence was a further reduction in electricity prices, with a reduction of 13 per cent from January. The average price was, according to NVE, the lowest observed in 20 years. The prices on electricity distribution had no change from January to February, and thus had a dampening effect on the downturn for electricity, gas and steam.
Increased industrial prices
The prices on industrial products rose by 1.4 per cent from January to February. Contrasting the other energy goods, prices on refined petroleum products had an increase of 1.9 per cent. Another example of an industry with price increses was the food industry. Here, the prices increased by 1.8 per cent, chiefly due to seafood and dairy products.