Producer prices of industrial products on the domestic market grew by 31.2% YoY in May 2022. The largest growth was still included in the Energy segment. If we were to exclude it, the growth would be 9.2% YoY.

The Croatian Bureau of Statistics has published a monthly report on the developments and trends in the industrial sector. According to the report, producer prices of industrial products on the domestic market grew by 31.2% YoY, 3.4% MoM. Excluding Energy, this growth would amount to 9.2% YoY, and 1.5% MoM.

This continues the trend we have seen since the beginning of the year, especially after the Russian invasion of Ukraine, the subsequent sanctions, and of course, the embargo by the EU on Russian oil exports, which even though is gradual, should be felt more and more in the months ahead, especially if quick alternatives aren’t found.

Breaking the PPI growth by segments, on an MoM basis, prices in Energy increased by 7.8%, Durable consumer goods by 3.6%, Non-durable consumer goods by 1.9%, Intermediate goods by 1.2%, while Capital goods by 0.6%. On a YoY basis, this growth is far more significant, with prices in Energy growing by 94.4%, Intermediate goods by 11%, Durable consumer goods by 9.6%, Non-durable consumer goods by 9.1%, and Capital goods by 4.9%.

If we were to look at the change in prices based on sectors, on a YoY basis, the largest growth of producer prices grew by Mining and quarrying, +384.2% (of which, Extraction of crude petroleum and natural gas grew by 724% YoY), in Electricity, gas, steam and air conditioning supply by 38.3%, in Manufacturing by 17%.

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

If the current situation in Ukraine continues escalating, for example, if Russia decides to reduce oil exports to European countries in order to put the maximum amount of pressure on pricing (as the embargo will happen whatever they do), then prices of oil will continue growing, which will have a continual impact on the PPI. Russia and Ukraine also export a lot of precious metals, fertilizers, wheat, and sunflower, and as such, the current situation will continue affecting the supply of those products, potentially driving prices even further.