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 1.6 per cent overall from May last year to May this year. This is a lower twelve-month growth than in April, when it was 3.2 per cent. The decrease in the twelve-month change from April to May 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 and in May, the growth was higher in the domestic market than in the export market.
This is mainly due to lower price growth in the basic metals and oil refining, which are important export industries where prices often fluctuate a lot, says Espen Kristiansen, head of section at Statistics Norway.
It is the first time since June last year that there has been greater twelve-month growth in the domestic market than in the export market for manufacturing as a whole.
In the basic metal industry, the price increase for exported goods from April last year to April this year was just over 9 per cent, while from May last year to May this year, prices decreased by 0.6 per cent. The refined petroleum product industry also had a significant decline in twelve-month rate from April to May.
Large fluctuations in the twelve-month rate in export prices are not uncommon in these industries, as shown in figure 2.
Figure 2 also shows that the price growth for exports from the food industry, the metal industry, and the refined petroleum product industry has gradually decreased over the past three months.
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 for imported food products, with price increases of between 12 and 22 percent. In February 2024, the twelve-month rate fell to just under 3 percent.
– 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 per cent, compared with the same periods last year, says Espen Kristiansen.
From May last year to May this year, the price increase for imported food products was 9.5 per cent in the PIF.
Other important twelve-month changes
- The price index for the extraction of crude oil and natural gas fell by 7.5 per cent in May, bringing down the overall 12-month rate of PPI from around 2.1 per cent in April to minus 0.1 per cent in May.
- Prices in the power supply sector, which includes electricity and the distribution of electricity, increased by 40.2 per cent from May last year to May this year, while the 12-month rate in April was 19.4 per cent. Here, prices fell by 4.9 per cent in the past month.
