Producer price rises driven by energy resource prices

In February 2012, producer prices rose 6.7% year-on-year, which is related to the growing oil prices in the global market and drives up the production costs for many industrial branches. The month-on-month rise in global food prices in February was lower than a year ago and had a lesser impact on the rise in producer prices.

In February 2012, producer prices rose most month-on-month in the branch of water supply and waste management (1.8%) while the producer price changes on the manufacturing production sold domestically and exported were similar, thus exerting no pressure on the competitiveness of costs.

Year-on-year, the most rapid rise in producer prices remained in the production of energy, which is a branch mostly oriented toward the domestic market, and therefore there remained a difference between the annual rises in the producer prices of production sold domestically and in the external markets (9.7% and 2.7% respectively).

Even though oil prices in February continued to be impacted by the political turbulences in the Middle East, Saudi Arabia and Libya have now increased their oil shipments, which, along with the possible weakening of demand in China, promote a drop in oil prices observed already. The increase in the oil shipments from the above countries and the return of exports from Libya to their pre-war levels expected as early as April point to a diminishing oil price risk, but uncertainty related to oil price dynamics is high because the political conflicts in the region still lack long-term solutions. A substantial drop in producer prices is thus not expected in the coming months. If, however, the expectations of a drop in global energy resource prices came true, such a drop would have a positive impact on consumer prices. Price lists could also be left unchanged by those producers and service providers whose cost-and-end-price balances at the beginning of the year allowed them to avoid factoring in the costs of energy resources in January and February. 

APA: Paula, D. (2022, 28. may.). Producer price rises driven by energy resource prices. Taken from https://www.macroeconomics.lv/node/2240
MLA: Paula, Daina. "Producer price rises driven by energy resource prices" www.macroeconomics.lv. Tīmeklis. 28.05.2022. <https://www.macroeconomics.lv/node/2240>.

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