Producer prices of industrial products on the domestic market increased by 24.7% YoY in March 2022. The energy sector still remains the main driver of this increase, and if we were to exclude it, the increase would amount to 6.8% YoY.
Croatian Bureau of Statistics has published its monthly report on the movements and trends in the industry sector. In it, we can see that the industrial producer price index on the domestic market increased by 24.7% YoY. If we were to exclude the energy sector, the total industrial PPI increase would amount to only 6.8% YoY in March 2022.
The increase can also be witnessed across various industrial sectors. On an MoM basis, PPI in Non-durable consumer goods grew by 1.3%, in Intermediate goods it grew by 1.1%, in Durable consumer goods it grew by 0.5%, and in Capital goods, it increased by 0.4%. Of course, the largest increase can be attributed to the growth the PPI experienced in the Energy sector, which grew by 11.1%, MoM.
On a YoY basis, the story is similar. Industrial PPI increased by 73.3% in the energy sector, in Intermediate goods by 9.9%, in Durable consumer goods by 6%, in Non-durable consumer goods by 5.6%, while in Capital goods it grew by 3.5%. This means that the growth of the PPI is experienced across all segments of the industry, but the increase in the Energy sector is by far the largest. If we were to break down the PPI increases in the energy sector, the largest increase by far came in the Minning and quarrying segment, which grew by 241% being by far the biggest driver. PPI in Electricity, gas, steam, and air conditioning supply increased by 11.7%, and in Manufacturing it grew by 10.7%.
Producer prices of industrial products (June 2016 – March 2022, each month, YoY, %)
Considering the current war in Ukraine, the sanctions imposed on Russia, and the expected repercussions of those sanctions, the expected increases in the Energy sector are to be expected, driven by the increasing prices of oil&gas (and especially gas when Europe is concerned). This increase is somewhat mitigated by govt. measures restricting price increases and lowering taxes on these commodities, but as can be seen, the increase is still present. Producers are hit even harder by these increases as they require a lot more of any of these commodities, especially in heavy industrial sectors. As the situation develops, and if it continues for a longer period of time, the producers will have to make a choice of lowering their margins or passing the cost of consumers, and as can be seen from the consumer price indices, they are probably forced to do a combination of both.