Rise in producers' index points to higher inflation

Input prices rose 1.5 per cent in the September quarter, says Statistics NZ, almost double economists' forecasts.

The Producer Price Index (PPI) outputs index rose 0.8 per cent, against expectations of 0.7 per cent.

The PPI measures changes in industry's costs and prices and is usually a leading indicator of how the Consumers' Price Index moves.

The most significant upward contribution to the PPI inputs index came from the wholesale trade index, which recorded a 4.5 per cent rise in the quarter.

This upward movement resulted mainly from higher prices in mineral, metal and chemical wholesaling, due to higher crude oil prices.

Other upward contributions came from the meat and meat product manufacturing index (up 11.3 per cent), due to higher prices for cattle and sheep; and the construction index (up 1.4 per cent), due to higher prices for inputs to non-building and residential building construction.

The major contributor to the output index was the livestock and cropping farming index, driven by higher wholesale prices for sheep and cattle.

Other significant contributions to the PPI output index came from the construction index (up 2 per cent) and finance index (up 3.9 per cent). The major contributors to these rises were the price of construction trade services, and financial intermediation services, respectively.

The PPI inputs index has risen 2.5 per cent in the September year and outputs index by 2.4 per cent.

These are the highest recorded annual increases since the year to the March 2002 quarter.

- NZPA