Electricity and dairy prices drive rise in input and output prices

Higher electricity and farm-gate milk prices contributed to rises in both producer output and input prices in the September quarter.

Both the output producers price index, which shows the prices producers receive for their goods and services, and the inputs PPI, which shows how much they pay to produce things, rose 1 percent in the September quarter, Stats NZ said. On an annual basis prices received by producers advanced 5.3 percent while prices paid by producers increased 4.3 percent.

Prices paid by farmers rose 0.4 percent in the quarter and 1.6 percent on the year while capital goods prices were up 0.5 percent in the latest three months for an annual increase of 2.9 percent.

"The drier winter has meant lower-than-usual lake levels for many of the country's hydroelectric power stations, which pushed up electricity generation costs," business prices manager Sarah Williams said in a statement.

Electricity and gas producers saw their input prices rise 5.9 percent in the latest quarter, mostly due to higher electricity generation costs. In turn, they passed on a 5.3 percent increase in their output prices. According to Stats NZ, electricity prices paid by commercial businesses rose 6.8 percent in the September quarter.

The prices received by dairy cattle farmers rose 6.1 percent, the sixth quarter in a row they have increased. The prices paid by dairy product manufacturers was up 5.1 percent. Both price gains were influenced by higher forecasted farm-gate milk prices, Stats NZ said.

The recovery in global dairy prices also drove the annual movement, with prices received by dairy cattle farmers jumping 27.1 percent in the September quarter from a year earlier while dairy product manufacturers' output prices rose 34.8 percent. The annual increase in input prices was boosted by dairy product manufacturers whose costs were up 22.6 percent.

Within other sectors, input costs for construction rose 0.6 percent in the September quarter and 3.2 percent on an annual basis while quarterly output prices gained 0.8 percent and were 4.2 percent higher than a year earlier.

(BusinessDesk)