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 1.3 per cent overall from September last year to September this year.
The prices of exported manufactured goods were 1.3 per cent lower in September than in the same month last year. The price increase for goods sold in Norway was 2.6 per cent in the same period.
– Since last 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 in the last five months, 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 chemical industry, the price increase for exported goods from August last year to August this year was just under 6 per cent, while from September last year to September this year prices increased by only 0.2 per cent. Prices for the basic metals industry also experienced a decline in the twelve-month growth from August to September. As we see in Figure 2, it is not uncommon to observe large fluctuations in the twelve-month growth rate of export prices for these industries.
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.
In the domestic market, food prices rose by 3 per cent from September last year to September this year. There was relatively high twelve-month growth in dairy products, as well as coffee and chocolate in the domestic market.
At the same time, prices for animal feed fell from September last year to September this year, which helped moderate the overall food price growth in the domestic market.
Other important twelve-month changes
- The price index for the extraction of crude oil and natural gas fell by just over 12 per cent from September last year to September this year, contributing to an overall decline in PPI prices by just under 3 per cent during the same period.
- Prices in the power supply sector, which includes electricity and its distribution, rose sharply by 38 per cent from September last year to September this year.
