Outputs
Output prices for all industries in the Producers Price Index (PPI) rose 2.8 percent in the September 2008 quarter, following rises of 3.5 percent in the June 2008 quarter and 1.8 percent in the March 2008 quarter. Wholesale trade and dairy cattle farming were the major contributors to the rise in the latest quarter.
Producers Price Index Outputs
All industries |
| Quarter |
Percentage change from previous quarter |
Percentage change from same quarter, previous year |
Sep 2006
Dec 2006
Mar 2007
Jun 2007
Sep 2007
Dec 2007
Mar 2008
Jun 2008
Sep 2008 |
1.0
-0.6
-0.2
1.2
1.6
1.4
1.8
3.5
2.8 |
4.9
4.1
3.1
1.4
2.0
4.0
6.1
8.5
9.8 |
The wholesale trade index (up 4.3 percent) made the largest contribution to the increase in output prices in the September 2008 quarter. The rise in this index followed rises of 6.0 percent in the June 2008 quarter and 2.9 percent in the March 2008 quarter. The main driver of the index was mineral, metal and chemical wholesaling, due to higher wholesale prices for various fuel types. In the year to the September 2008 quarter, the wholesale trade index rose 17.3 percent, the largest annual rise since the series began in the June 1994 quarter. This compares with relatively smaller rises of 1.4 percent in the year to the September 2007 quarter, and 7.1 percent in the year to the September 2006 quarter.
The dairy cattle farming index (up 24.4 percent) made the second-largest contribution to the increase in output prices. This rise follows a 2.1 percent rise in the June 2008 quarter, and a 1.3 percent fall in the March 2008 quarter. Driving up this index was a higher farmgate price for whole-milk solids. Change in the whole-milk payout is only shown in the PPI each September quarter, so the movement reflects the increase in price between the September 2007 and September 2008 quarters. In the year to the September 2008 quarter, the dairy cattle farming index rose 25.6 percent, following a 25.7 percent rise in the year to the September 2007 quarter, and a smaller rise of 5.0 percent in the year to the September 2006 quarter.
The livestock and cropping farming index rose 17.5 percent in the September 2008 quarter, following an 8.2 percent rise in the June 2008 quarter, and an 8.4 percent fall in the March 2008 quarter. This latest rise is the largest quarterly increase since the series began in the June 1994 quarter. Higher prices for both prime beef and prime lamb livestock were the main contributors to the rise in the latest quarter. In the year to the September 2008 quarter, the livestock and cropping farming index rose 19.8 percent, following falls of 5.6 percent in the year to the September 2007 quarter, and 1.8 percent in the year to the September 2006 quarter.
The main downward contributor to the overall rise in output prices was the electricity generation and supply index (down 15.0 percent). This fall followed a record 30.9 percent rise in the June 2008 quarter, and a 16.4 percent rise in the March 2008 quarter. The fall was driven by the electricity generation sub-index, with respondents citing spot market conditions and improvements in the hydro lake levels as reasons for lower average electricity generation prices. In the year to the September 2008 quarter, the electricity generation and supply index rose 22.7 percent, compared with a 0.8 percent fall in the year to the September 2007 quarter, and a 7.8 percent rise in the year to the September 2006 quarter.
In the year to the September 2008 quarter, the PPI outputs index rose 9.8 percent. This annual movement is the largest rise since a 10.0 percent rise in the year to the March 1987 quarter.
Inputs
Input prices for all industries in the PPI rose 3.7 percent in the September 2008 quarter, compared with rises of 5.6 percent in the June 2008 quarter and 2.3 percent in the March 2008 quarter. The September 2008 quarter is the sixth consecutive quarter in which the inputs index has risen.
Producers Price Index Inputs
All industries |
| Quarter |
Percentage change from previous quarter |
Percentage change from same quarter, previous year |
Sep 2006
Dec 2006
Mar 2007
Jun 2007
Sep 2007
Dec 2007
Mar 2008
Jun 2008
Sep 2008 |
1.8
-0.3
-1.6
1.4
2.1
1.4
2.3
5.6
3.7 |
7.0
5.3
2.8
1.3
1.6
3.3
7.3
11.8
13.6 |
The wholesale trade index rose 8.1 percent in the September 2008 quarter, and made the most significant upward contribution to the PPI inputs index. The rise followed 6.4 percent and 3.7 percent rises in the June and March 2008 quarters, respectively. Higher prices in the mineral, metal, and chemical wholesaling index (attributable to increases in imported crude oil prices) were the main drivers for the latest rise. In the year to the September 2008 quarter, the wholesale trade index rose 25.2 percent, which is the largest annual increase since the series began in the June 1994 quarter. This rise compares with a 4.1 percent fall in the year to the September 2007 quarter, and a 14.9 percent rise in the year to the September 2006 quarter.
The second most significant contributor to the PPI inputs index was a 20.2 percent increase in the dairy product manufacturing index. The main driver to the September 2008 quarter's rise was higher whole-milk prices at the farmgate. As mentioned in the Outputs commentary, the change in this whole-milk payout is only shown in the PPI each September quarter. Annually, from the September 2007 quarter to the September 2008 quarter, the dairy product manufacturing index rose 22.9 percent, following a 27.3 percent rise in the year to the September 2007 quarter, and a smaller rise of 5.1 percent in the year to the September 2006 quarter.
The meat and meat product manufacturing index (up 22.3 percent) was the third most significant contributor to the rise in input prices in the September 2008 quarter. This latest increase is the largest quarterly rise since the series began in the June 1994 quarter, and compares with a 9.5 percent rise in the June 2008 quarter, and an 8.6 percent fall in the March 2008 quarter. The latest rise was mainly driven by higher prices for both prime beef, and prime sheep and lamb livestock at the farm gate. In the year to the September 2008 quarter, the meat and meat product manufacturing index rose 27.0 percent, which is the highest recorded rise since the series began. This rise compares with a 8.7 percent fall in the year to the September 2007 quarter.
Partly offsetting the overall rise in input prices in the September 2008 quarter was a fall in the electricity generation and supply index (down 31.5 percent). This fall is the largest since the series began in the June 1994 quarter, and compares with rises of 50.8 percent and 41.7 percent in the June and March 2008 quarters, respectively. The purchase of bulk electricity occurred at lower prices, due to spot market conditions and an improvement in hydro lake levels (as cited by respondents). Despite the latest quarterly fall, the electricity generation and supply index rose 35.0 percent in the year to the September 2008 quarter. This rise compares with falls of 5.2 percent and 5.9 percent in the years to the September 2007 and 2006 quarters, respectively.
Input prices for all industries recorded a 13.6 percent increase in the year to the September 2008 quarter, which is the largest annual rise since a 15.9 percent rise in the year to the September 1985 quarter. The latest increase compares with rises of 1.6 percent in the year to the September 2007 quarter and 7.0 percent in the year to the September 2006 quarter.
Commodities
All three of the published commodity indexes for livestock recorded movements that were the largest rises since the series began in the June 1994 quarter. The movements included rises of 23.8 percent for cattle, 22.6 percent for sheep and lamb, and 18.3 percent for deer.
The 23.8 percent rise in the livestock: cattle index followed an 8.4 percent rise in the June 2008 quarter, and an 8.2 percent fall in the March 2008 quarter. Higher farmgate prices across the board for bulls, steers and cows drove this index up in the latest quarter. In the year to the September 2008 quarter, the livestock: cattle index rose 24.2 percent, the largest increase since a 26.8 percent rise in the year to the December 2000 quarter.
The 22.6 percent rise in the livestock: sheep and lamb index followed a 10.4 percent rise in the June 2008 quarter, and a 14.4 percent fall in the March 2008 quarter. This index was driven up by the higher prices farmers received for prime lamb livestock. In the year to the September 2008 quarter, the sheep and lamb index rose 23.6 percent, the largest increase since a 38.2 percent rise in the year to the September 2001 quarter.
Livestock: deer rose 18.3 percent, following a 7.5 percent rise in the June 2008 quarter, and a 0.5 percent fall in the March 2008 quarter. Driving up this index were higher farmgate prices for both hinds and stags. In the year to the September 2008 quarter, the livestock: deer index rose 43.3 percent, which is the largest annual increase since the series began in the June 1994 quarter.
The largest mover among the published commodities indexes was fertiliser (up 36.4 percent). This latest movement was the largest rise since the series began and followed rises of 5.3 percent in the June 2008 quarter, and 15.6 percent in the March 2008 quarter. Higher prices for various phosphatic fertilisers were recorded, a result of high world demand and suppliers' prices. The 66.3 percent rise in the year to the September 2008 quarter was also the largest annual rise since the series began in the June 1994 quarter.
The logs for export market rose 15.2 percent in the September 2008 quarter, the largest quarterly rise since the series began in the June 1997 quarter. Higher prices were received for export logs, due to a combination of the depreciating New Zealand dollar and a low volume of logs exported (as cited by respondents). In the year to the September 2008 quarter, the logs for export market index rose 8.6 percent, compared with a flat movement (up 0.3 percent) in the year to the September 2007 quarter.
Also rising in the September 2008 quarter was the international sea freight index (up 16.1 percent). The latest rise in this index follows rises of 3.2 percent in the June 2008 quarter, and 0.5 percent in the March 2008 quarter, and is the largest since the series began in the June 1994 quarter. Prices for sea freight were driven up by fuel bunkering adjustments, coupled with the depreciating New Zealand dollar. In the year to the September 2008 quarter, the international sea freight index rose 22.7 percent, the largest annual increase since a 23.8 percent rise in the year to the December 2000 quarter.
Impact of exchange rates
When calculating the PPI, prices collected on the fifteenth day of the middle month in the quarter are generally used to represent the entire quarter. Prices collected for imported goods are often denominated in foreign currencies. These currencies are converted to New Zealand dollars using the exchange rate at the time of pricing.
The New Zealand dollar depreciated against the currencies of the country's five major trading partners in the September 2008 quarter. The table below shows changes in the value of the New Zealand dollar in foreign currency denominations, from the June 2008 quarter to the September 2008 quarter.
Exchange Rates
Bank selling rates for NZ$1.00 |
| |
USA
(NZ$:US$) |
UK
(NZ$:pound) |
Australia
(NZ$:AUS$) |
Japan
(NZ$:yen) |
Europe
(NZ$:euro) |
15 May 2008
15 August 2008 |
0.7572
0.6909 |
0.3886
0.3699 |
0.8052
0.7941 |
79.0570
75.6480 |
0.4878
0.4649 |
| Percentage change |
-8.8 |
-4.8 |
-1.4 |
-4.3 |
-4.7 |
Source: Westpac Banking Corporation.
Note about the Farm Expenses Price Index
From this release onwards, the Farm Expenses Price Index will be produced for the March quarter of each year only. As indicated in the June 2008 quarter Hot Off the Press, this change is due to reprioritisation of some parts of Statistics New Zealand's output programme. If you would like more information about this change, please contact Litia Tapu at 04 931 4600.
Price index developments
Statistics New Zealand began work in 2004 on a progressive redevelopment of PPIs. This involves re-evaluation of the items that are priced and the weights that are applied to them. At this stage the redevelopment applies only to output indexes, with new input indexes to be finalised once all of the output indexes have been redeveloped.
The following published indexes have been redeveloped and took effect from the September 2008 quarter:
- PPIQ.SUA07 – Fishing
- PPIQ.SUK – Finance and insurance
- PPIQ.SUK01 – Finance
- PPIQ.SUK02 – Insurance
- PPIQ.SUK03 – Services to finance and insurance
- PPIQ.SUL02 – Ownership of owner-occupied dwellings
There have also been redevelopments within the business services index (PPIQ.SUL04):
- Computer services
- Other business services
For more information please see the technical notes section of this release.
For technical information contact:
Mark Gordon or Stephanie Ye
Wellington 04 931 4600
Email: info@stats.govt.nz
Next release ...
Producers Price Index: December 2008 quarter will be released on 16 February 2009.