Milk prices continue to drive producer prices

Milk prices continue to drive producer prices

20 February 2017

Producer output prices rose 1.5 percent in the December 2016 quarter, and producer input prices rose 1.0 percent, Statistics New Zealand said today.

Producer output prices were mainly influenced by higher prices received by dairy product manufacturers (up 14 percent), and higher farm-gate milk prices received by dairy cattle farmers (up 13 percent).

“Producer prices were driven by a higher forecasted farm-gate milk price, which rose to $6.00 a kilo in mid-November 2016. This compares to $4.60 a kilo a year before, and $8.65 a kilo in the March 2014 quarter, when prices received by dairy cattle farmers were at their peak,” business prices manager Sarah Williams said.

Prices received by producers in the mining and construction industries were also up, by 13 percent and 1.6 percent respectively. Construction prices were affected by labour and material costs.

Producer input prices were mainly influenced by prices paid by dairy product manufacturers (up 11 percent), due to the increase in farm-gate milk prices. Price rises in petrol (up 5.7 percent) and diesel (up 8.5 percent) also contributed to higher input prices paid by producers across many industries. Some relief came from lower electricity prices paid by producers (down 13 percent).

In the year to the December 2016 quarter, producer output prices increased 2.5 percent, and producer input prices increased 2.3 percent. The capital goods price index (CGPI) increased 3.4 percent in the year, influenced by civil construction (up 3.1 percent), and the construction of residential buildings (up 6.0 percent) and non-residential buildings (up 5.6 percent).

For more information about these statistics:

• Visit Business Price Index: December 2016 quarter

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