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NZ producer prices fall in fourth quarter on dairy products, weaker crude oil

20 Feb 2015

New Zealand producer prices fell in the fourth quarter, reflecting the decline in prices of dairy products and crude oil, while livestock and meat prices rose.

Input prices, which are the prices paid by producers for raw materials, fell 0.4 percent in the fourth quarter, while output prices slipped 0.1 percent, according to Statistics New Zealand. Input prices fell 1.9 percent in the fourth quarter from a same period of 2013, while output prices declined 0.8 percent.

Global dairy prices slumped about 48 percent last year, based on the GlobalDairyTrade price index. Prices have rebounded at the past two fortnightly auctions, led by a 36 percent surge for whole milk powder. Crude oil futures fell almost 50 percent last year but as started to make a comeback in 2015, with Brent for April settlement reaching US$62.53 a barrel on the London-based ICE Futures Europe exchange, the highest close since Dec. 11.

The decline in input PPI in the fourth quarter reflected a 8.9 percent decline for dairy product manufacturing due to lower farmgate milk prices. In the year, the dairy product manufacturing index was down 34 percent, compared to a 41 percent gain in the year to the December 2013 quarter. The input PPI for petroleum and coal product manufacturing fell 12 percent in the quarter, reflecting lower global oil prices, the biggest decline since the first quarter of 2009.

Output prices for dairy product manufacturing fell 10 percent in the fourth quarter, the third straight quarterly decline, reflecting lower prices for milk powder. In the year, dairy output prices tumbled 20 percent. The output PPI for dairy cattle farming declined 9.9 percent in the quarter, also the third straight decline and again reflecting lower farmgate milk prices. In the year, dairy cattle farming output PI tumbled 40 percent.

Output prices for meat manufacturing rose 8.3 percent in the latest quarter, partly reflecting higher export beef prices, the government statistician said.

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