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Falling Crude Oil Prices Lower PPI

Producers Price Index: March 2001 quarter

Falling Crude Oil Prices Lower Producers Price Index

Prices paid and received by New Zealand producers both fell in the March 2001 quarter according to Statistics New Zealand's Producers Price Index (PPI). The PPI inputs index, which measures changes in the price of inputs to production, fell 0.9 per cent in the March 2001 quarter. The PPI outputs index, which measures changes in prices received by producers, fell 0.2 per cent. The fall in both indexes follow seven consecutive quarters of rises in the PPI.

Input prices rose 14.1 per cent and output prices rose 9.4 per cent between the March 1999 and December 2000 quarters, after five years of relative price stability.

All Industries Input and Output Prices Base: December quarter 1997 (=1000) (Embedded image moved to file: pic05824.pcx) Crude oil had a major impact on input prices in recent quarters. In the March 2001 quarter, the PPI measure of crude oil prices fell by almost 25 per cent as a result of lower international prices and an appreciation of the New Zealand currency against the US dollar. However, crude oil prices are still two and a half times the level of the March 1999 quarter. The wholesale trade inputs index (includes oil companies) fell 6.6 percent in the March 2001 quarter.

The flow-on effect of crude oil also had an impact on output prices. The wholesale trade outputs index fell 1.8 per cent in the March 2001 quarter as petrol and diesel prices fell. Also influencing the fall in output prices were lower oil condensate prices, which impact on New Zealand's oil and gas producers. A fall in international wood pulp prices was also recorded in the March 2001 quarter.

The manufacturing outputs index recorded a rise of 0.4 per cent, partially offsetting the fall in other prices. Among products that manufacturers received higher prices for in the March 2001 quarter were electrical goods, fertiliser, methonal and dairy products.

Ian Ewing DEPUTY GOVERNMENT STATISTICIAN

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