Producer input, output prices drop in first quarter, driven by lower fuel prices
Input prices fell 1 percent in the first quarter for an annual decline of 0.9 percent.
New Zealand producer input and output prices fell in the first quarter, mainly driven by lower fuel prices and weaker output prices for sheep, beef, grain and dairy products.
Input prices fell 1% in the first quarter for an annual decline of 0.9% while output prices declined 0.2% in the quarter for a 0.1% annual gain, Statistics NZ said.
Input prices for petroleum and coal manufacturers have more than halved since the second quarter of 2012. In the first quarter of this year, their input prices fell 22% and their output prices dropped 18%, which the government statistician said was mainly influenced by lower crude oil, petrol and diesel prices. Lower fuel prices also led to a 0.3% decline in the farm expenses price index. Fuel has been a major element of weak inflation, with the consumer price index rising 0.2% in the first quarter, or 0.5% excluding petrol.
The business price indexes come a day after the release of the Reserve Bank's quarterly survey of expectations, which showed expectations for inflation one year out rose to 1.22% from 1.09% in the previous survey, which was the lowest reading since 1994, while the two-year ahead figure barely budged at 1.64% from 1.63%. Persistently weak inflation adds to the case for the central bank to cut the official cash rate a quarter point to 2% as soon as its June meeting.
Output prices for sheep, beef and grain farmers fell 8.7% in the first quarter, while output prices for meat manufacturers fell 4.6%. Dairy cattle farmers' output prices fell 6%, although output prices for dairy product manufacturers rose 3.4%.
Output prices for telecommunication, internet and library services rose 3.4% and inputs rose 3.2%, which Statistics NZ says followed the Commerce Commission's ruling in December on maximum wholesale broadband prices.
(BusinessDesk)
Jonathan Underhill
Wed, 18 May 2016
Wed, 18 May 2016
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Producer input, output prices drop in first quarter, driven by lower fuel prices
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