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 1.8 per cent overall from June last year to June this year. This is a somewhat higher twelve-month growth than in May, but significantly lower than in April, which was 3.2 per cent.
The twelve-month rate was lower on the export market than on the domestic market in both May and June.
– 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 had almost disappeared, and in May and June, the growth was higher on the domestic market than on the export market.
This is partly due to lower price growth in the basic metals industry, an important export industry where prices often fluctuate a lot, says Espen Kristiansen, head of section at Statistics Norway.
In the chemical industry, the price increase for exported goods from May last year to May this year was 9.3 per cent. From June last year to June this year those prices increased by 4.8 per cent. The basic metal industry also had a decrease in the twelve-month growth rate from May to June.
As we see in Figure 2, large fluctuations in the twelve-month growth rate of export prices are not uncommon in these industries.
PIF - food prices
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 until February this year, the rate of price increase on imported food products rose again. From February to June this year it was between 9 and 11 percent, compared to the same period last year, says Espen Kristiansen.
On the domestic market, the increase in food prices from June last year to June this year was only 1.8 per cent.
Other important twelve-month changes
- The price index for the extraction of crude oil and natural gas fell by 6.6 per cent in June, contributing to a change in the overall twelve -month growth rate of PPI from -0.1 per cent in May to -1 per cent in June.
- Prices in the power supply sector, which includes electricity and its distribution, increased by almost 13 per cent from June last year to June this year, while the 12-month rate in May was just over 40 per cent. From May to June, prices in the power sector fell by 18 per cent.
