Producer price index for paper and paperboard

IBISWorld estimates that the price of paper and paperboard will increase at a compound annual rate of 4.2% to reach 141.1 points over the five years through 2023-24. Paper and paperboard prices are influenced by global supply and demand particularly in China and parts of North America. Paper prices have been volatile over the past five years. The depreciation of the pound relative to currencies inflated paper prices for the domestic market, contributing to prices rises through to 2018-19. Paper prices have also been affected by the rise of e-commerce. As demand for packaging has increased over the period, a number of paper mills have ramped up production of cardboard packaging at the expense of paper production, causing a supply shortage of paper, intensifying the price rises.

These trends were reversed over the two years through 2020-21 as the coronavirus pandemic caused a sudden decline in paper demand across the globe. Demand from businesses fell in March 2020 immediately after lockdown measures were implemented to combat the spread of the virus. Sales of newspapers and magazines declined rapidly while demand for office supplies also plummeted. The sudden decline in paper demand and low prices caused Finnish paper manufacturing giant Stora Enso Oyj to close two paper mills in 2021. However, as supply of paper fell amid mill closures and demand for carboard packaging, the energy crisis in Europe in the autumn of 2021 caused the price of paper to start surging. Prices rose 9.4% between August 2021 and December 2021 alone, according to the ONS, as paper producers passed on energy cost increases to customers. Overall, producer price index for paper and paperboard expanded by 15.2% in 2021-22. The index expanded by 19.8% in 2022-23 due to lower global production and inflationary pressure. Average prices are forecast to decline by 0.9% in 2023-24 as production ramps up over the year.