The PPI fell by 7.2 percent from August to September. It was the extraction of crude oil and natural gas that had the largest contribution to the fall, with the decrease in natural gas prices weighting in the heaviest. Prices went down in several other industries, including basic metals, which saw prices falling for the fourth month in a row.

– Price development for basic metals is a part of the international market for raw materials. Reduced demand in metals because of fear of recession in the US, UK, and in the Eurozone among others, may be an explanation for the price fall, says Espen Kristiansen, head of division for price statistics at Statistics Norway.  

Price development in manufacturing has turned

The producer prices in the manufacturing sector fell by 1.8 percent from August to September.

– Several manufacturing industries have experienced sharp rises in prices for goods they produced in the last two years. However, for manufacturing in total, this has turned in the last couple of months, says Kristiansen.

Figure 1. Producer Price index for manufacturing total, 2015=100

The downturn in prices for manufacturing in September mainly comes because of the lowered prices for metals, among them iron and steel, but also lower prices for refined petroleum products.

The heavy price increase in basic metals, which started in early 2021, was superseded by decreases starting in June this year. From August to September, the fall was at 2.8 percent.

Also, for the food industry, there were in comparably large price increases from the start of 2021, but then prices fell in August before a modest increase in September. Chemical and pharmaceutical industries also had a similar heavy increase anteceding a fall in July and August, with modest increase in September.

For fabricated metal goods, the increase started a little later than for the other mentioned industries, and and the prices continued to increase for this industry.

Figure 2. Producer Price indices for manufacturing total and chosen industries, 2020=100

Fall in prices on oil and gas, albeit from high levels

The combined index for extraction of crude oil and natural gas fell by 13.3 percent in September, with natural gas having the greatest fall. The prices for oil fell for the third month in a row, but September’s fall was much smaller than the one on natural gas. European countries have completed their targets in filling of gas stockpiles for the winter earlier than planned. This may have contributed to less uncertainty and thus reduced prices. However, the index for natural gas prices still lay high in a historical perspective and they have also led to reduced demands from many energy intensive industries, among them production of fertilizers. Several producers of fertilizers have closed production in the third quarter.