The Producer Price Index (PPI), a measure for the performance of the Industrial sector, for second quarter of the current fiscal year (Q2, 2016) reached 45.1 points, with an increase of 3.7 percent compared to the previous quarter (Q1, 2016).
However, when compared with the corresponding quarter of last year, the PPI index in second quarter witnessed a decrease of 28.4 percent, according to data released by the Ministry of Development Planning and Statistics yesterday. The index includes a wide range of economic activities such as Mining and quarrying; including oil and gas excavation with a 72.7 percent relative weight; Manufacturing activity, which is produced locally, such as food industry, petroleum refining, iron and steel industry, petrochemicals and other industries; with a 26.8 percent relative weight and Electricity and Water: namely; power plants, water desalination and purification stations, with a 0.5 percent relative weight.
In Q2, 2016, the prices for the mining increased by 3.2 percent compared to the previous quarter (Q1, 2016) due to growth in oil and natural gas prices.
Given the group’s weightage of 72.7 percent in the PPI basket, the increase led to a noticeable overall PPI increase in Q2, 2016 compared to Q1, 2016. The Manufacturing Group showed a rise of 5.4 percent in the price compared to the previous quarter. This group consists of 11 sub-groups. There was an increase in 8 sub-groups and a decrease in one sub-group, while the "Paper and its Products" and "Grain mill products" remained unchanged.
When Q2, 2016 numbers are compared to Q1, 2016, the "Refined petroleum products" witnessed the highest increase of 8.6 percent followed by "Rubber and plastic products" by 3.7 percent, and third came the "Basic Metal" sub-group, by 2.4 percent, followed by "Soft drink" by 0.9 percent. The prices for this major group decreased by 6.3 percent compared to the previous quarter, due to a decrease of 4.8 percent in electricity production prices as well as a 8.4percent in water production prices. Given the group’s slight weightage in the basket, it had little impact on the overall PPI.
The PPI for the second quarter of 2016 fell by 28.4 percent compared to the corresponding quarter of 2015.
However, there was a variation in change percentages in the PPI major groups. The prices for this major group showed a decline of 34 percent due to the declining prices of the "Crude Petroleum and Natural Gas" sub-group by nearly same percentage. The Manufacturing group showed a noticeable decrease of 16.6 percent between the production prices of Q2, 2016 and the corresponding quarter of 2015, due to various positive and negative changes in the eleven sub-groups products, where four sub-groups recorded an increase, the other six were declined, while stability noticed in "Newspapers and periodicals" group.
The prices for the utilities group recorded a decrease of 1.8 percent, as a result of decline of 0.9 percent in electricity production prices, and 3.1 percent in water production prices. The index measures average change overtime in domestic product prices.
