Higher prices on oil and petroleum products
The Producer Price Index (PPI) increased by 1.2 per cent from April to May. This was the third month in a row with an increase. Except for February this year the PPI has risen continuously since July last year.
The upward trend in the PPI is mainly caused by the price of crude oil. The price, which was close to 80 USD per barrel in May, has not been as high since before the sharp price drop through the fall of 2014. In addition to pulling up the PPI directly, the oil price also pulls up the price development within manufacturing indirectly. Namely through refined petroleum products that are an important manufacturing industry. One can see that the price development on refined petroleum products is closely related to the price of oil.
Figure 1. Price indices. 2013=100
|Extraction of crude oil||Refined petroleum products|
The monthly change in the PPI was not particularly high historically, even though the price of oil rose by over 10 per cent and several industries had upward price movements. Lower price on natural gas and electricity were the most important contributions to counteract the increase in the PPI. Both these industries typically show some seasonal pattern. This is mainly due to the fact that both are in many cases used for heating. When temperatures rise in Europe and in Norway this typically decreases the demand for natural gas and electricity respectively and thus also the prices.
Upward movement within manufacturing
The price development on Norwegian manufactured goods has over some time been positive. The twelve-month change has been well above 3 per cent since August last year. Some of this can be attributed to refined petroleum products, although it will also, to a certain degree, hold when petroleum products are excluded.
The twelve-month change within manufacturing as a whole was 6.7 per cent in May, while it was 3.6 per cent if petroleum products are excluded. Among industries with price increases since May last year were metals, food products and chemical products. The metal industry, which is one of Norway’s most important export industries, has seen a price increase of over 12 per cent the last twelve months. Several metals contributed to this but especially nickel has seen an increase. The spot price of nickel has increased about 50 per cent since May last year.
Figure 2. Price indices. 2014=100
|Manufacturing total||Manufacturing excluding petroleum products|