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 3.2 percent overall from April last year to April this year. This is a lower twelve-month growth than in March, when it was 5.9 per cent. The decrease in the twelve-month change from March to April was greater in the export market than in the domestic market.
– Since autumn last year, price growth for exported goods has been significantly higher than for goods sold on the domestic market. However, by April the gap has almost disappeared. This is mainly due to lower price growth in the chemical industry and oil refining, which are important export industries where prices often fluctuate a lot, says Espen Kristiansen, head of section at Statistics Norway.
Within the chemical industry, the price change for exported goods from March last year to March this year was just over 30 per cent, while from April last year to April this year, prices increased by 4.4 per cent.
The refined petroleum product industry also experienced a significant decline in the twelve-month growth from March to April.
Large fluctuations in twelve-month growth in export prices are not uncommon in these industries, as shown in figure 2.
The figure also shows that price inflation for exported food and basic metals has gradually decreased over the past three months.
Higher prices on 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. One important commodity group within the import market is food.
Throughout most of 2023, there were high twelve-month rates on imported food, with a price growth of between 12 and 22 per cent. In 2024, the twelve-month rates fell towards 2-9 per cent.
– At the end of 2024 and so far this year, the price increase for imported food products has increased again, and from February to April was around 11 percent, compared with the same periods last year, says Espen Kristiansen.
Other important twelve-month changes
- The price index for the extraction of crude oil and natural gas fell by 11.5 per cent in April, bringing down the overall 12-month rate of PPI from around 11.5 per cent in March to 2.1 per cent in April.
- Prices in power supply, which includes electricity and power distribution, increased by 19.4 per cent from April last year to April this year, while the 12-month rate in March was 13.9 per cent. Here, prices fell by 4.6 per cent in the past month.
