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Electricity Continues to Drive PPI

Embargoed until 10:45am – 17 May 2006

Electricity Continues to Drive PPI

Output prices were up 0.7 percent and input prices rose 0.9 percent in the Producers Price Index (PPI) during the March 2006 quarter, Statistics New Zealand said today. The increases in both the inputs and outputs indexes were predominantly driven by the electricity generation and supply industry.

In PPI outputs, the electricity generation and supply index increased 6.1 percent during the March 2006 quarter; its sixth consecutive quarterly increase, attributable to the rising wholesale price of electricity. Other significant positive contributors to the outputs index included the wholesale trade index (up 1.6 percent, due to higher bulk diesel prices in the mineral, metal and chemical wholesaling sector) and the dairy product manufacturing index (up 3.7 percent, due to increased prices for whole milk powder).

Significant downward contributors to the PPI output index were the livestock and cropping farming index (down 9.3 percent), finance index (down 3.1 percent), and petroleum, coal and basic chemical manufacturing index (down 5.6 percent).

The 0.9 percent increase in input prices was largely driven by the electricity generation and supply index, up 8.8 percent this quarter, reflecting higher bulk electricity prices. Other noteworthy positive contributors to the PPI inputs index were the construction index (up 2.8 percent, due to the increased cost of construction trade services) and the wholesale trade index (up 0.7 percent, reflecting the rise of world crude oil prices and higher domestic natural gas prices).

The overall increase in input prices was partly offset by a 10.2 percent fall in the meat and meat product manufacturing index, the only significant downward contributor in the March 2006 quarter. Lower wholesale prices for cattle (especially bulls and steers) and prime lambs was the key factor contributing to the negative movement of this index.

In the year to the March 2006 quarter, the PPI outputs index rose 4.0 percent and the PPI inputs index rose 7.2 percent.

Brian Pink
Government Statistician


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