NZ producer prices point to inflation pressures

Thursday 18th November 2010

New Zealand producer input and output prices rose more than expected in the third quarter, suggesting inflationary pressures are beginning to stir in the domestic economy.

Producer input prices rose 0.7%in the three months ended September 30, compared to the second quarter, while output prices climbed 1.2%, according to Statistics New Zealand. Inputs were seen rising 0.5% and outputs by 0.6%, according to a Reuters survey.

Input prices have now gained for four straight quarters and were driven by higher livestock prices for lamb and cattle and by higher farm-gate prices for milk, as were output prices in the latest quarter. Meat and dairy made up 67% of the gain in input prices in the three months ended Sept.30.

The New Zealand dollar rose to 77 US cents from 76.91 cents immediately before the figures were released. Traders expect the Reserve Bank to raise the official cash rate by about 78 basis points over the next 12 months, based on the Overnight Index Swap curve.

Businesswire.co.nz

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