Electricity and dairy push up producers' prices

Producers' prices rose in the March 2008 quarter, with output prices up 1.8 percent and input prices up 2.3percent, Statistics New Zealand said today.

The main driver in the rise in output prices was the dairyproduct manufacturing index, while the electricity generation and supply index was the most significantcontributor to the rise of input prices.

In Producers Price Index (PPI) outputs, the dairy product manufacturing outputs index rose 13.7 percent inthe March 2008 quarter, mainly driven by higher export prices of milk powder, cheese and butter.

Fromthe March 2007 quarter to the March 2008 quarter, the dairy product manufacturing index rose 50.4percent, the highest ever recorded annual increase since the series began in June 1994 quarter.

Thiscompares with a fall of 3.4 percent in the year to the March 2007 quarter and an increase of 10.1 percent inthe March 2006 quarter.

The overall rise in the PPI outputs index in the latest quarter was partly offset by a fall in the livestock andcropping farming index which declined 8.4 percent.

The overall rise in the PPI inputs index in the March 2008 quarter was driven mainly by a marked increaseof 41.7 percent in the electricity generation and supply index.

This is the largest quarterly rise recordedsince the series began in June 1994 quarter. In the year to the March 2008 quarter, the electricitygeneration and supply index recorded a 40.7 percent increase, compared with a decrease of 31.6 percentin the year to the March 2007 quarter and an increase of 46.9 percent in the year to the March 2006quarter.

The meat and meat product manufacturing index, which declined 8.6 percent, was the main downwardcontributor to partly offset the overall rise in the PPI input prices in the latest quarter.In the year to the March 2008 quarter, the PPI outputs index rose 6.1 percent and the PPI inputs indexrose 7.4 percent.

Geoff BascandGovernment Statistician

There is a companion Hot Off The Press information release published – Producers PriceIndex: March 2008 quarter.