Continued drop in PPI
Heavy price falls on natural gas and refined petroleum products lead to a decrease of 2.7 percent in the producer price index for May. This comes despite a solid increase in prices on crude oil this month.
The price on oil halved from the levels of December 2019 during the winter and spring of 2020. One month’s decrease was superseded by the next, and the drops contributed to a continued fall in total PPI. In May however, the oil price increased by more than 12 percent, thus slightly curbing the fall. The prices on natural gas on the other hand, forcefully pulled the total index down in May, with a reduction of nearly 30 percent. This very low natural gas price have a number of reasons. Both mild weather and Covid-19 lockdowns along with a general insecurity in the world economy have all been proposed as contributing factors. Refined petroleum products also had a big price drop in May, with 15.7 percent, and was contributary when the prices on manufacturing in total fell by 1.8 percent.
Figure 1. Price index. 2015=100
|PPI total||Extraction of crude oil and natural gas|
Price increases on electricity
The Norwegian Water Resources and Energy Directorate (NVE) reported historical lows in electricity prices during the second part of May. More snow melting due to higher temperatures, combined with reduced demand, made the spot price as low as 1 øre/kWh at certain hours this month. Despite this, the total index on electricity, gas and steam increased by 5.7 percent from April to May. This monthy increase is the first in 2020, but it came from a very low level, and the index still lay almost 30 percent lower than at same time in 2019.