More evidence of an unexpectedly strong recovery emerged this morning with release of figures on the costs of business inputs.What was expected to be a boring set of producer price indices (PPI) turned out to be a little more eye-raising.
More evidence of an unexpectedly strong recovery emerged this morning with release of figures on the costs of business inputs.
What was expected to be a boring set of producer price indices (PPI) turned out to be a little more eye-raising.
The PPI measures the change, in the case of “inputs,” in the costs of production – items such as materials, energy costs, transport, rents, business services and other inputs.
In the case of PPI "outputs," it measures the changes in the prices received by businesses.
Today’s results were – in the words of one bank economist yesterday – expected to be “uneventful.”
Consensus market forecasts for both the inputs and outputs part of the index were for a small rise of 0.5% for the March quarter – a result unlikely to dislodge anyone’s hosiery.
Socks were, though, if not knocked off then certainly prised over the heel when Statistics New Zealand unveiled a 1.3% increase in output prices and 1.8% increase in input prices.
Electricity generation and supply prices rose 16.2% for the quarter, following a 6.7% rise in December and an 8.2% decrease in September. The main cause appears to be higher demand – itself an indicator of higher than expected economic activity – along with low lake levies and higher spot market prices.
Dairy product manufacturing rose 6.5% for the quarter.
On the outputs side, overall producer prices rose 1.8%. Again, the consensus market forecast was for a rise of 0.5%.
Dairy product manufacturing prices rose 29.6%, the largest increase since the series began in June 1994. This followed a rise of 5.4% on the December quarter and a 10.9% decrease in September.
Wholesale trade prices were the second largest contributor to the rise in output prices, rising 1.6% – the first rise for five quarters.
