Producer price index, 15 December 2007

The average oil price (Brent Blend, in NOK) was 0.4 per cent lower in December than in November, leading to a minor change in the price index for oil and gas extraction from 172.4 to 172.3 (2000=100). The price increase in manufacturing industries was a slight 0.2 per cent. This was also the change in the overall producer price index.

With a decline of 0.8 per cent, prices in the metal industry fell for the fourth consecutive month. The most important metals in the Norwegian PPI are non-ferrous metals, which prices have fallen steadily since they reached record levels in April. From November to December, the decrease was 1.7 per cent.

The highest increases in December were seen in prices of chemicals and electricity. Prices of chemicals and chemical products were up 1.6 per cent, mainly due to a 2.3 per cent increase in prices of basic chemicals. Following a steep rise since the summer, the price of electricity edged up by a moderate 1.7 per cent from November to December.

Twelve-month change

The total producer price index was 12.4 per cent higher in December 2007 compared with the same month in 2006. This is the highest twelve-month increase since July 2006. The main reason for the strong increase is found in the market for energy goods. Despite moderate changes in the month to December, prices of both oil and electricity were notably higher in December 2007 than in the last month of 2006. The increases were 29.1 and 34.9 per cent, respectively. With an increase of 30.6 per cent, prices of refined petroleum products also had a relatively strong increase during these twelve months.

Annual change

When comparing yearly averages the PPI was virtually unchanged from 2006 to 2007. Following three years of double-digit growth, a fall in producer prices of 0.1 per cent is hardly noticeable. Oil contributed to the stability. Despite significant price fluctuations during these two years and a 46.9 per cent increase from January to December 2007, the average oil price was only 2.1 per cent higher in 2007 than in 2006.

With the record electricity prices of 2006 and the price slump following the wet summer of 2007, the yearly decrease in electricity prices was 35.7 per cent.

Prices in manufacturing industries overall rose by 5.6 per cent from 2006 to 2007, continuing an upward trend that started in 2004. Prices of electrical and optical equipment fell by 0.2 per cent. Apart from this industry all manufacturing industries saw prices increase. The highest increases were in prices of wood and wood products. After a noticeable growth in the first half of 2007 prices stayed at a high level, leading to a 15.4 per cent increase from 2006 to 2007. The metals industry also saw relatively high prices in 2007, a development that started in late 2005. The price increase was strong in the first half of 2007, but fell somewhat from April. Still, the metals prices were 12.4 higher in 2007 than in 2006.