Dairy costs drive output prices

Output prices for all New Zealand industries rose 1.1 per cent in the June quarter, driven by dairy manufacturing prices leaping 5.5 per cent in the same period.

The dairy product manufacturing index rise follows an almost 30 per cent rise in March quarter and a 5.4 per cent rise in the December 2009 quarter following higher export prices for wholemilk powder, cheese and butter, according to Statistics New Zealand's Producers Price Index figures.

The livestock and cropping farming index rose six percent in the June quarter based on higher prices for cattle and lamb, while the wholesale trade index lifted 1.4 per cent, mainly centred on higher diesel and petrol prices.

Dairying, livestock and cropping, meat and meat products, and wholesale trade contributed 59 per cent of the overall 1.1 per cent increase in the outputs index.

For the June year, output prices have increased 8.5 per cent. Input prices for all industries in the PPI rose 1.4 per cent in the June quarter, driven by a 3 per cent increase in the wholesale trade index.

On an annual basis the wholesale trade index rose 9.7 per cent to the June year.

Together, the wholesale trade, meat and meat product manufacturing, and dairy product manufacturing indices contributed 57 per cent of the overall 1.4 per cent increase in the inputs index.

The largest downward contributor in the June quarter was electricity generation prices, which fell 5.9 per cent, following a 16.2 per cent increase in the March quarter and a 6.7 per cent increase in the three months to December 2009.

Higher lake levels and above average inflows during the quarter were the main reasons cited for the latest fall.

On an annual basis, the electricity generation and supply index rose 7.1 per cent to the June year.

Overall, input prices rose 2 per cent in the June year.