Price decrease on energy goods
The price of electricity has steadily fallen during the spring of 2019, from the record breaking year of 2018. It continued this downward trend in June which, together with other energy products, contributed to a steep decline in the producer price index.
2018 was a year which saw unusually high electricity prices in Norway. A long and cold winter drove the demand on electricity up. An equally long and dry summer decreased the supply. So far, 2019 has had a different development in prices, and the spot prices in June were almost 38 percent lower than at the same time last year. This is directly reflected in the export price index in PPI. In the domestic market, the pricefall was reduced by a combination of prices subject to tax for the households and fixed prices for the industry. Nevertheless, the electricity prices were a major contributor to the decline of PPI by 4,9 percent.
Figure 1. Price indices. 2015=100
|Electricity, gas and steam||PPI total|
Energy and metals pulled down
The last major increase in price of gas came in October 2018. Since then, the price has fallen by over 50 per cent, aided by yet another pricefall from May to June. The price of crude oil has, on the other hand, had a moderate increase during 2019, but fell by 13 percent from May to June. This fall, together with the pricefalls for electricity, metals and refined oil products, contributed to the large total decrease in PPI.
Price increase for extraction services
Of the industries that had a positive contribution on the total index in June, one can mention services for extration of crude oil and natural gas. The price index for these services went up by over 11 percent this month. Equinor awarded contracts worth 2,5 billion NOK earlier this spring. Movements in this index are often closely related to signing of new contracts, and these awards may have been a contributing factor to the increase.