1. Introduction to Producer Price Index: 

The Producer Price Index (PPI) measures average change overtime in domestic product prices. PPI is one of the key indicators used to reduce prices when estimating Gross Domestic Product (GDP) at constant prices, where GDP is compared in a time series after excluding the impact of prices.

The Price and Indices Section also issued an updated series of producer price index, after recalculating them on the base year 2018. The change in the base year is a basic requirement due to the change in economic activities, especially the manufacturing sector, which witnessed significant changes during the previous five-year period.

Noteworthy, The Producer Price Index was launched for the first time in 2010 on a quarterly basis, and later in 2013, it was launched monthly. The following economic activities are the main components of the producer prices index basket:

1. Mining and quarrying activity; including oil and gas excavation with an 82.46% relative weight.

2. Manufacturing activity, which is produced locally, such as food industry, petroleum refining, iron and steel industry, petrochemicals, and other industries; with a 15.85% relative weight.

3.   Electricity, gas, steam, and air conditioning supply: power plants with a 1.16% relative weight. 

4.   Water Supply: water desalination and purification stations, with a 0.53% relative weight. 

The PPI basket has been graded into seven levels, where the lowest level is the level of goods (seventh level), then the upper level starts with groups from fifth to first level.  Seventh and fifth levels are classified by Central product Classification (CPC.2) and from level fourth and first level are classified by international Standard Industrial Classification of All Economic Activities (ISIC.4). The added value of economic activities (from the national accounts section) was used to calculate the relative importance of the levels from the fourth to first level. 

The Producer Price Index for Q1, 2024 reached 113.58 points, with a decrease of 4.83% compared to the previous quarter (Q4, 2023), and decreased by 9.55% when compared to the corresponding quarter of the previous year (Q1, 2023).

This is due to the decrease in the most important component sector of the product basket, which is the mining sector, that represents a relatively large weight with 82.46%  of the total of the product basket,  recorded a 114.51 points, up from the previous quarter by 5.62%, and down by 10.08% from  the same quarter of the previous year, The index of the manufacturing industry sector reached 107.16, affected by the decrease in the prices of a number of groups during that period. 

3. Comparing Q1, 2024 to Q4, 2023(Q-O-Q):

The overall PPI stood at 113.58 points, with a decrease of 4.83% compared to the previous quarter (Q4, 2023), because of several changes in the prices of the four economıc sectors. 

In Q1, 2024 the prices for this major sector decreased by 5.62% compared to the previous quarter (Q4, 2023), due to a drop in oil and natural gas prices by 5.63%, while the group “Other mining and quarrying” remained steady. Given the sector’s weightage of 82.46% in the PPI basket, the overall PPI in Q1 was affected directly by the trend of it.

 

• Manufacturing:

The manufacturing sector showed a decrease of 1.90% in the price compared to the previous quarter. This group consists of eight sub-groups, five of them recorded a decrease in prices as follow: “Manufacture of rubber and plastics products” by 6.28%, “Manufacture of coke and refined petroleum products” by 5.50%, “Manufacture of beverages” by 2.52%, “Manufacture of chemicals and chemical products” by 2.04%, and “Manufacture of printing and reproduction of recorded media” by 0.22%. Other groups noticed an increase as follows: “Manufacture of other non-metallic mineral products” by 4.80%, "Manufacture of basic metals" by 0.74%, and “Manufacture of food products" by 0.57%.

The electricity sector showed an increase of 13.76% compared to the previous quarter due to the increase occurred in electricity production prices. In given the group’s slight weightage in the basket, it had a little impact on the overall PPI.

• Water Supply:

The water sector showed a decrease by 1.20%, compared to the previous quarter, due to the decrease occurred in water production prices. In given the group’s slight weightage in the basket, it had a little impact on the overall PPI.​

4. Comparing Q1, 2024 to the corresponding Quarter in 2023 (Y-o-Y):

The PPI for the first quarter of 2024 decrease by 9.55% compared to the corresponding quarter of 2023. However, there was a variation in percentages change in the PPI major groups.

• Mining: 

The prices for this sector showed a decrease of 10.08% due to a decrease in the prices of “Crude petroleum and natural Gas" by 10.09% and a slight negligible change in “Other Mining and Quarrying” by 0.01%.

• Manufacturing:

The Manufacturing group showed a decrease of 8.48% between the production prices of Q1, 2024 and the corresponding quarter of 2023, due to various positive and negative changes in the eight sub-groups products. six sub-groups recorded a decrease and the other two increased.

Sub-groups witnessing a decrease between the two quarters(Y-o-Y):

• “Manufacture of chemicals and chemical products” by 10.83%.

• “Manufacture of basic Metals” by 8.07%.

• “Manufacture of coke and refined petroleum products” by 5.35%.

• “Manufacture of other non-metallic mineral products” by 4.94%.

• “Manufacture of rubber and plastics products” by 3.66%.

• “Printing and reproduction of recorded media” by 0.38%.

       Sub-groups witnessing an increase between the two quarters(Y-o-Y):

• “Manufacture of food products” by 3.79%.

• “Manufacture of Beverages” by 0.13%. 

• Electricity, gas, steam, and air conditioning supply: 

The prices for this group recorded an increase of 9.33% compared with the first quarter in the previous year (2023)

• Water Supply:

The prices for this group recorded an increase of 7.24% compared with the first quarter in the previous year (2023).

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