Primary Products Pull Down Output Prices

Embargoed until 10:45am – 16 May 2007

Primary Products Pull Down Output Prices

Producers prices fell in the March 2007 quarter, with output prices down 0.2 percent, and input prices down 1.6 percent, Statistics New Zealand said today. The recent falls in the output prices are mainly due to price falls in primary products.

The livestock and cropping farming outputs index fell 11.4 percent in the latest quarter, the first decrease in this index since the March 2006 quarter. The main drivers of this fall were lower prices for vegetables, due to increased supply levels. The horticulture and fruit growing index fell 11.5 percent in the March 2007 quarter, also due to lower prices for vegetables. Another significant downward contributor to the overall fall in producers output prices was a fall in the electricity generation and supply index, which fell 3.1 percent due to lower spot market prices.

Partly offsetting the overall fall in output prices was a rise of 5.1 percent in the forestry and logging index.

Forestry prices have been rising over the past year, with the high demand for logs in Asia outstripping international supply being the main reason behind the price rise.

The overall fall in the producers price inputs index was mainly driven by lower prices in the wholesale trade index, which fell 8.0 percent in the March 2007 quarter. Lower prices for crude oil and domestic natural gas and the appreciating New Zealand dollar were the most significant contributors to the fall.

Partly offsetting the fall in the producers input index was a rise in the construction index (up 1.1 percent), due to an increase in the cost of construction trade services.

In the year to the March 2007 quarter, both the producers price outputs index and the producers inputs index rose 2.7 percent.

Dallas Welch (Mrs)
Acting Government Statistician

ENDS

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