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Prices Increase as Dollar Falls

Producers Price Index: March 2000 Quarter

The average price level for business inputs and outputs has again increased according to Statistics New Zealand's March 2000 quarter Producers Price Index. This continues a pattern of increases apparent since the June 1999 quarter, says Deputy Government Statistician Ian Ewing.

Input prices increased 1.4 per cent, while output prices increased 0.9 per cent in the March 2000 quarter. Changes of similar magnitude were observed in the previous two quarters.

The inputs index is now 4.9 per cent higher than the March 1999 quarter, an annual movement not seen since the June 1990 quarter. This follows a period of very little change in the index, which had a cumulative rise of only 2.4 per cent in the previous five years, said Mr Ewing.

The depreciation of the New Zealand dollar has several effects on the Producers Price Index. A lower New Zealand dollar will have an upwards influence on the price of imported inputs. These increased costs may in turn be passed on to businesses and consumers by domestic industries. In addition, there will be an upwards influence on the New Zealand dollars prices of exported outputs.

The wholesale trade inputs index, which covers the industry that includes oil companies, has increased 3.3 per cent in the March 2000 quarter. World crude oil prices have continued to remain high and the depreciation of the New Zealand dollar against the United States dollar has further increased the price.

Ian Ewing
Deputy Government Statistician

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