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Dairy cost increases drive lift in output prices

Thursday 19th August 2010

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

The dairy product manufacturing index rise follows an almost 30% rise in the March quarter and a 5.4% 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 6% in the June quarter based on higher prices for cattle and lamb, while the wholesale trade index lifted 1.4%, mainly centred on higher diesel and petrol prices. 

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

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

On an annual basis the wholesale trade index rose 9.7% to the June year. Together, the wholesale trade, meat and meat product manufacturing, and dairy product manufacturing indices contributed 57% of the overall 1.4% increase in the inputs index. 

The largest downward contributor in the June quarter was electricity generation prices, which fell 5.9%, following a 16.2% increase in the March quarter and a 6.7% increase in the three months to Dec. 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% to the June year. 

Overall, input prices rose 2% in the June year.

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