Electricity prices retreat from recent high

A fall in electricity generation prices from unusually high levels late last year mainly influenced the fall in both input and output producers’ prices in the March 2019 quarter, Stats NZ said today.

The overall prices that producers received for the goods and services they produced (output PPI) fell 0.5 percent in the March 2019 quarter. The prices that producers paid for the inputs they used (input PPI) fell 0.9 percent. Both output and input price indexes fell for the first time since the March 2016 quarter.

Prices paid by electricity and gas supply producers fell 12 percent in the March 2019 quarter, after a 23 percent rise in the December 2018 quarter. Prices received by the industry also fell 7.0 percent after increasing 18 percent in the December 2018 quarter.

Power generation prices partly retreated in the March 2019 quarter.

“Prices were higher than normal in the December 2018 quarter mainly due to the temporary closure of a key supplier of gas-fired generation, the Pohokura gas field, for maintenance and lower hydro lake levels,” business prices manager Sarah Johnson said.

“This meant higher-cost generation filled the gap, driving up wholesale electricity prices.”

Lower prices for exported butter led to a fall in dairy product manufacturing prices (down 5.2 percent), also pushing down the output PPI in the March 2019 quarter. This is down from recent highs for this commodity.

Prices paid by petroleum and coal product manufacturers also fell (down 16 percent) mainly because of lower imported crude oil prices. It was the first fall after rising for five quarters in a row. Consumers also benefited from lower prices for petrol (down 7.0 percent) and diesel (down 5.7 percent) as measured in the consumers price index (CPI), March 2019 quarter.

The overall farm expenses price index (FEPI) fell 0.1 percent in the current quarter mainly due to a fall in animal feed prices. The lower cost of electricity and petroleum also influenced the lower costs to farmers. Input costs to all farm types fell for electricity (down 1.6 percent) and fuel (down 6.7 percent).

In the March 2019 quarter, the capital goods price index (CGPI) rose 0.5 percent mainly influenced by higher prices of purchasing and construction of new residential buildings.

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