Electricity Drives PPI Increases

Producers Price Index: December 2005 — 16 February 2006

Electricity Drives PPI Increases

Output prices in the Producers Price Index (PPI) rose 0.3 percent and input prices rose 1.2 percent in the December 2005 quarter, the seventh consecutive quarterly increase for both indexes, Statistics New Zealand said today. The electricity generation and supply index was the most significant positive contributor to both indexes, reflecting higher wholesale prices for electricity in the December 2005 quarter.

The most significant upward contributor to the PPI outputs index, the electricity generation and supply index, rose 8.8 percent in the December 2005 quarter, its fifth consecutive quarterly increase.

Other significant upward contributions to the outputs index came from the mining index (up 7.7 percent, due to higher export prices for crude oil, increased spot prices for gold, and higher world prices for exports of coal) and the construction index (up 1.2 percent, due to increased costs for electrical installation and site preparation services in the construction trade services index).

The 1.2 percent increase in the PPI inputs index was driven by the electricity generation and supply index, which rose 11.2 percent in the December 2005 quarter. Other significant upward contributors were the wholesale trade index (up 2.6 percent, due to the increased cost of crude oil), and the air transport index (up 4.8 percent, due to the increased cost of aviation fuel).

Downward contributions to the PPI outputs index came from the meat and meat product manufacturing index (down 7.3 percent), the livestock and cropping farming index (down 5.2 percent), and the wholesale trade index (down 0.9 percent).

The meat and meat product manufacturing index (down 4.7 percent) was the only major negative contributor to the PPI inputs index. In the year to the December 2005 quarter, the PPI outputs index rose 3.9 percent and the PPI inputs index rose 6.5 percent. The latest annual increase in the PPI inputs index was the highest since an 8.1 percent rise in the year to the June 2001 quarter.

Brian Pink

Government Statistician

ENDS

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