Producer price index, 15 December 2006

The Producer price index (PPI) ended 2006 with a slight reduction of 0.1 per cent from November to December. The month's over all index fall would be larger had not oil prices bounced back, with a 2.1 per cent increase following four consecutive months of decline. The price of electricity continued the steep slump since its peak in August. The index of prices received by producers of power fell by 20.7 per cent from November to December. This development is likely to be related to the mild weather experienced lately, combined with price inflating fears of a power crisis in late summer. The sub-index fell by 37.6 per cent from August to December.

Prices of food and beverages were also down from November to December, by 0.1 per cent. Prices of both meat and fish fell. Producers of animal feed, however, received 0.7 per cent higher prices for their products in December than in the previous month.

Metals prices saw their second consecutive month of decline, with a fall of 1.4 per cent. This was mainly due to lower prices of aluminium and copper.

Large price changes during 2006

Some of the sub-indices of the PPI stand out with relatively large changes during 2006. Despite two setbacks,in March and June, prices of metals increased considerably through the year before leveling off in the three final months. Since December 2005, the index for metal prices has increased by 31.8 per cent. The increase is due to high international demand and trade in the metals markets by investors.

Energy prices, dominated by those of crude oil, natural gas and hydroelectric power in the case of the Norwegian economy, saw two notable spikes during the year. The first occurred in late spring and the second towards the end of the summer. These periods of rapid price growth and subsequent falls are also evident in the over all PPI.

December 2005 to December 2006: A total rise of 4.9 per cent

The last month's decline brings the index to almost the same level in December as it was in January of 2006. Compared with December of 2005 the total index grew by 4.9 per cent, and all main sub-indexes of the PPI but one saw positive growth rates. The exception was the index for electrical and optical equipment, which fell by 0.7 per cent.