Producer prices of industrial producers on the domestic market increased by 20.7% YoY in January. The increase was mostly driven by an increase in the energy sector, however, if we were to exclude it, the increase amounts to only 5.7%.
Croatian Bureau of Statistics published new data on the trends in the industry sector, which reveals that the industrial producer price index went up by 20.7% on the domestic market. Excluding the energy prices, the total industrial PPI increased by 5.7% YoY in January 2022.
The increase is supported by other industrial sectors. Food production sector prices increased by 6.2%, beverage production sector went up by 0.9%, capital goods increased by 3.2%, durable consumer goods went up by 5.1%. All this is significantly impacting domestic producers which have made them increase prices to end consumers.
The growth of natural gas and oil prices is a direct result of increased demand in Asia (especially China and Japan) as well as the increased need for these energy sources in countries like Germany due to the shutting down of nuclear reactors. This is supported by the political situation in Europe which is marked by Ukraine – Russia invasion that has all created strong upward pressure on prices of these commodities. All this has resulted in a considerable increase in energy prices, which increased by 57.6% YoY.
Analysing this even further, the main category which drives the energy sector price increase is indeed the mining and quarrying sector, which increased almost four-fold YoY. The main driver of this increase inside the sector is the extraction of crude petroleum and natural gas, which increased almost five-fold YoY, which further supports the sentiment that the energy price increase was driven by these commodity price increases.
However, even with all increases, the PPI numbers on the domestic market remain on a similar level in the last 3 months (19.8% in November, 19.6% in December, 20.7% in January). This suggests that the worst of the price increases is over, barring some events that might disrupt the supply of natural gas and oil (like further escalation of Ukraine – Russia situation).
Producer prices of industrial products for each month (% YoY)