NZ producer prices show tepid growth in December

Monday 20th February 2012

New Zealand manufacturers continued to report tepid input and output price inflation in the final three months of last year, embedding the idea that the Reserve Bank won’t have to hurry to raise interest rates.

The Producer Price Index’s input prices, which measure the change in price of goods and services used by the productive sector, rose 0.5 percent in the three months ended Dec. 31, slowing from a two-year-low pace of 0.6 percent in the September quarter, according to Statistics New Zealand.

A 3.8 percent fall in electricity, gas and supply prices was the biggest downward contributor, offsetting the rebound in prices paid to dairy farmers by manufacturers.

On an annual basis, dairy product manufacturers’ input prices have dropped 3.1 percent, unwinding some of the high farmgate prices paid during the 2010/11 season.

Across all industries, input prices rose 4.2 percent.

The PPI’s output prices, which measure changes in the price of goods and services produced locally, rose 0.1 percent, the slowest pace since December 2009. A 3.2 percent fall in the price of horticulture and fruit growing damped gains in meat and dairy prices, with a bigger than normal vegetable supply holding down prices.

Output prices rose 3.4 percent annually. The annual price paid to dairy farmers fell 4.7 percent as farmgate prices came off highs from the year before.

In a separate release, the capital goods index rose 0.4 percent in the December quarter, led by a 1 percent gain in the civil construction prices and a 0.4 percent rise in residential building prices. Statistics NZ said civil construction was mainly influenced by rising wages for roading and railway construction materials, while more expensive residential housing came from rising costs of building new dwellings.

BusinessDesk.co.nz

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