The Producer Price Index (PPI) measures price developments in manufacturing, extraction of oil and gas, electricity supply and mining, both in terms of sales to the Norwegian market and abroad. In this article, we mainly focus on the manufacturing industries. Key Norwegian manufacturing industries include the food industry, chemical production, petroleum and coal processing, and basic metal manufacturing.
The producer price index (PPI) measures the price development that important parts of the Norwegian industry receive for their goods. Compared with the more well-known consumer price index (CPI), PPI measures price developments at an earlier point in the value chain. The CPI measures the price development that households pay for different goods, while the PPI measures prices "at the factory gate". Thus, PPI is an important indicator of the condition in the Norwegian industry. The index is used to analyse the Norwegian economy and can also be an indication of the development in the CPI. The PPI measures the price development in extraction of oil and natural gas, manufacturing, water- and electricity supply and for certain services, including services related to oil and gas extraction. Prices are measured on goods sold in the first stage of sales from the producer to the Norwegian market (domestic market), in addition to the foreign market (export market).
Lower price growth on exported manufactured goods
Prices for manufactured goods produced in Norway rose by 1.9 per cent overall from October last year to October this year. As in previous months, prices in the domestic market had a stronger rise compared to those in the export market, but the gap between the price growth in the two markets was somewhat reduced in the last month.
– Since autumn last year and until April this year, the price growth of exported manufactured goods has been significantly higher than for goods sold domestically. However, by April the gap had almost disappeared, and during the last half year, the growth has been higher on the domestic market than on the export market, says Espen Kristiansen, head of section at Statistics Norway.
In the domestic market, manufacturing prices increased by 2.8 per cent from October last year to the same month this year. This was a slightly larger twelve-month growth than in September, when it was 2.6 per cent.
In the export market, there was a price decline from September last year to September this year, while prices were almost unchanged in the most recent twelve-month period.
One of the manufacturing industries with price growth in the export market from October last year to October this year was the food industry, with a price increase of 11.6 per cent. This was a significant rise from the twelve-month growth in September, when prices increased by 7.2 per cent. Exported seafood saw a substantial price growth of 15 per cent and contributed strongly to the overall price increase for exported food from October last year to October this year. Prices on exported fish rose as much as 4.7 per cent in October, resulting in yet another new price record for exported seafood this month.
In the chemical industry, prices on the export market increased by 4.3 per cent from October last year to the same month this year. This was a significant rise from the previous twelve-month period, which was 0.2 per cent.
Both within basic metals and refined petroleum products, prices were still lower in October this year compared to the same month last year, but the decrease was nonetheless smaller than in the previous twelve-month period.
As we can see from Figure 2, large fluctuations in the twelve-month growth rates are not unusual for several manufacturing industries in the export market.
Subdued price increase for imported food
Statistics Norway's price index of first hand domestic sales (PIF) shows price changes for imported goods as well as price changes on goods sold to the domestic market, including food products.
Throughout most of 2023, there were high twelve-month rates on imported food, with price increases between 12 and 22 percent. In February 2024, the twelve-month rate fell to just under 3 per cent.
– From July last year to this summer, the price growth of imported food picked up again, but since June, it has eased significantly, says Espen Kristiansen, head of section at Statistics Norway.
Prices of imported food products increased by 4.2 per cent from October last year to this year, slightly down from the previous twelve-month period. It was the product group of coffee, tea, cocoa, and spices that contributed most to the overall price increase, where prices rose by almost 27 per cent.
On the domestic market, however, prices rose more in the last twelve-month period than in the previous one, helped by higher prices for various fish products. From October last year to October this year, prices increased by 3.4 per cent in the domestic market.
Other important twelve-month changes
- The price index for extraction of crude oil and natural gas fell by approximately 20 per cent from October last year to October this year, contributing to an overall decline in PPI prices by close to 7 per cent during the same period.
- Prices in the power supply sector, which includes electricity and its distribution, rose by 30 per cent from October last year to October this year.
