Producer prices dip on lower dairy, power

Last updated 13:01 19/08/2014

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Falling dairy prices and lower wholesale electricity prices helped push down overall producer prices in the June quarter.

Statistics NZ said prices received by producers, as measured b​y​ the output producers price index, fell 0.5 per cent in the June quarter.

Input prices, the prices of goods and services used by producers, fell 1 per cent.

"Lower milk prices contributed to decreases in both the input and output PPIs in the June quarter," Statistics NZ prices manager Chris Pike said.

Lower prices for raw milk led to lower prices received by dairy cattle farmers (down 11 per cent). There was also a fall in input prices paid by dairy product manufacturers (down 9.4 per cent).

In the past six months, dairy prices have slumped about 40 per cent, with the latest GlobalDairy Trade auction result due out on Wednesday morning. The drop in prices followed a sharp rise in stockpiles of milk powder in China. Those inventories are now being run down.

Statistics NZ figures out today also showed the input electricity and gas supply price index fell 8.4 per cent, due to lower prices for electricity generation.

Lower electricity prices reflect wholesale spot-market conditions, a shift towards geothermal production over thermal (gas-fired) generation, and higher lake levels.

In the year to the June 2014 quarter, the output PPI was up 2.5 per cent, and the input PPI rose 1.4 per cent.

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