New Zealand producers had their margins squeezed by rising electricity and gas prices in the June quarter as increasing prices for beef, lamb and dairy products weren't enough to offset more expensive power.
The output producers price index, which shows the prices producers receive for their goods and services, rose 1.3 per cent in the June quarter, a smaller increase than the 1.4 per cent increase in the inputs PPI, which shows how much they pay to produce things, Statistics New Zealand said. The outputs measure was led higher by an 8.8 per cent gain in prices received by sheep, beef cattle and grain farmers and a 6.9 per cent increase in meat and meat product manufacturing prices. However, the price producers paid for electricity and gas supply rose 8.5 per cent, seeing an overall narrowing of margins in the quarter.
"These increases were influenced by higher prices for electricity generation, partly arising from a dry winter," business prices manager Sarah Williams said in a statement. "Higher output prices for electricity lead to higher input costs for other industries."
Wholesale electricity prices have spiked higher in recent months as low hydro-lake levels coincided with heavy winter demand for power.
Still, the data show annual margins improved with the output PPI rising 5.2 per cent from a year earlier, outpacing a 4.7 per cent increase in input prices. The recovery in global dairy prices drove the annual movement, with prices received by dairy cattle farmers jumping 53 per cent in the June quarter from a year earlier, and dairy product manufacturers' output prices rising 35 per cent. The annual increase in input prices was led by dairy product manufacturers whose costs were up 42 per cent.
