Rebound in power prices drives biggest gain in producer prices in almost two years

Friday 17th May 2013

New Zealand producers' input and output prices posted the biggest gains in almost two years in the first quarter, driven by a rebound in electricity prices and higher prices for dairy manufacturers.

Producer input prices, which are a measure of wholesale inflation, rose 0.8 percent in the first quarter from three months earlier, according to Statistics New Zealand. Output prices also rose 0.8 percent. They were the biggest increases since the second quarter of 2011.

Electricity and gas input prices jumped 15.1 percent, snapping two quarters of decline, which the statistician said was mainly due to higher power generation prices in the face of lower lake levels. The output price index for electricity and gas gained 12.5 percent, driven by higher generation prices and spot-market conditions.

Electricity and gas input prices fell 0.4 percent in the year through March, while output prices rose 1.4 percent.

Dairy manufacturing input prices rose 4.5 percent in the first quarter, reflecting higher prices for raw milk, while on an annual basis prices dropped 2.7 percent. Dairy output prices rose 5.7 percent in the latest quarter, after six straight quarterly declines, reflecting higher export prices for milk powder.

Prices of dairy products reached a record high last month, based on the GlobalDairyTrade GDT-TWI Price Index.

The dairy cattle farming outputs index rose 5 percent in the first quarter, reflecting higher farm gate milk prices received by dairy farmers. The index fell 7.7 percent in the year, the seventh straight annual decline.

The sheep, beef cattle and grain farming output index fell 7.8 percent in the quarter and 11.5 percent in the year, the fourth annual decline.

Meat and meat product manufacturing input prices fell 7.8 percent in the quarter on lower prices for sheep, lamb, beef and cattle. In the year, input prices fell 10.4 percent, the biggest drop since 2009.

There were mixed results for price movements in commodities. The price index for export logs rose 5.3 percent in the quarter, driven by offshore demand. The Fertiliser index fell 0.5 percent and the sea freight index fell 5.6 percent, which the government statistician said reflected price competition for containerised cargo.

The price index for commercial rent rose 0.6 percent, led by office buildings. On an annual basis commercial rents rose 3.8 percent, the biggest gain since the March quarter of 2008.

Separately today, government figures showed the capital goods prices fell 0.1 percent in the first quarter to be up 0.8 percent from a year earlier.

BusinessDesk.co.nz

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