KEY POINTS:
Prices received by dairy product manufacturers rose 15 per cent in the December quarter, Statistics New Zealand (SNZ) said today.
The rise was the largest for any quarter since the producers price index (PPI) series began in the June 1994 quarter.
Overall, the PPI outputs index, which measures changes in prices received by producers, rose 1.5 per cent in the quarter, compared to a median forecast of 1.2 per cent in a Reuters' poll of economists.
The inputs index, which measures changes in the cost of production excluding labour and capital, rose 1.3 per cent, compared to the forecast of 1.2 per cent.
The rise in dairy product output prices was due to higher export prices for milk powder, cheese and butter, SNZ said.
From the December 2006 quarter to the December 2007 quarter, the dairy product manufacturing index rose 33.9 per cent, in contrast to the slight fall of 1.1 per cent in the year to the December 2006 quarter.
The overall rise in the PPI outputs index was partly offset by a 5.3 per cent fall in electricity generation and supply in the latest quarter.
The overall rise in the PPI inputs index was driven mainly by a 5 per cent rise in the wholesale trade index, driven by higher crude oil prices in the mineral, metal and chemical wholesale index.
For the year from the December 2006 to December 2007 quarters the wholesale trade index rose 0.5 per cent. That compared with increases of 12.2 per cent and 18 per cent in the years to the December 2006 and December 2005 quarters, respectively.
The electricity generation and supply index was the main downward contributor to partly offset the rise in overall input prices in the latest quarter, down 7.8 per cent mainly driven by lower spot market prices.
In the year to the December 2007 quarter, the PPI outputs index rose 4 per cent and PPI inputs index rose 3.4 per cent.
Bank of New Zealand senior economist Craig Ebert said the figures affirmed the inflation pressure in the economy.
"This is a truly economy-wide price index, which has picked up. It's further confirmation that not only is inflation pressure strong, it's running on the high side," he said.
Also released today, the capital goods price index (CPGI) rose 0.8 per cent in the December quarter, with higher construction prices for houses and machinery prices the main contributors to the rise.
That took the rise in the CPGI for the year to the December quarter to 2.3 per cent.
The residential buildings index made the most significant upward contribution to the CGPI, lifting 1.2 per cent in the December quarter.
That was mainly due to higher construction prices for new houses driven by higher prices for construction components, increased subcontractors' charges and higher prices for fittings, SNZ said.
In the year to the December quarter, the residential buildings index rose 5.1 per cent.
- NZPA
