Producer prices of industrial products on the domestic market increased by 24.2% YoY, and 1.0% MoM in November 2022. Excluding the growth in the Energy segment, the growth on a YoY amounted to 11.1%, while on an MoM basis, it remained the same.

The Croatian Bureau of Statistics, DZS, has published the latest monthly report on the changes and developments the industrial producer prices in Croatia. In the report, we can see that the producer prices of industrial products continued growing on a YoY basis, increasing by 24.2%, while on a monthly basis, they remained flat. The Energy segment remains the main driver of this growth, and if we were to exclude it, producer prices growth would amount to 11.1% YoY and would remain stable MoM.

Looking at the growth by segments, during the month, producer prices on the domestic market in the Energy segment increased by 3% MoM, while they remained stable in the remaining categories. On a yearly basis, the largest increase was recorded in the Energy segment, which increased by 60.5%, followed by Non-durable consumer goods, with 12.9%, Durable consumer goods, by 12.5%, intermediate goods, by 10.3%, and finally, Capital goods, with a growth of 6.1%.

This would mean that despite the growth still being significant on a yearly basis, there has been a slowdown on a monthly basis, which is quite positive news. The reasons for this could be multiple; first of all, the government measures first implemented at the start of October are bearing fruit. At the same time, the main drivers of strong price growth, high gas and electricity prices, have somewhat stabilized over the last couple of months, which also contributed to the decline on a monthly basis. However, it should be noted that the base is already quite high in November 2021, and as such, the 24.2% growth on a yearly basis is still quite significant compared to those levels.

Meanwhile, looking at the producer price changes by sectors, on a YoY basis, Electricity, gas, steam and air conditioning supply increased by 73.3%, Manufacturing increased by 13.6%, while in the Mining and quarrying, they increased by 9.5%. On a monthly basis, the largest increase was recorded in Electricity, gas, steam and air conditioning supply, which grew by 7.8%, followed by Manufacturing, which increased by 0.9%, while the largest decrease was recorded in Mining and quarrying, with a decrease of 40.5% YoY.

Producer prices of industrial products (June 2016 – November 2022, %)

Source: DZS, InterCapital Research

The data on the monthly decrease, especially in the Mining and quarrying, can be correlated to the lower oil, but especially gas prices we have witnessed for the last couple of months. As the price growth of these commodities was the main driver of the producer price growth, the reduction in this category is quite positive. However, as the producer prices growth was recorded across other categories too. This means that after a year of high price pressure, it has spilled over to other segments, and as such, a decrease in the commodity prices, especially in a market as volatile as the current one, might not be enough, especially in the short term. As such, if the trend of lower energy prices continues, it might take several months until the effects are seen on the total producer prices, and by extension, consumer prices.