Notes for this release
Revisions have been made to some historical Producers Price Index (PPI) data. For more information please refer to the revisions section at the end of this commentary.
Outputs
Output prices for all industries in the Producers Price Index (PPI) rose 3.5 percent in the June 2008 quarter. The rise followed smaller rises of 1.8 percent in the March 2008 quarter, 1.4 percent in the December 2007 quarter and 1.6 percent in the September 2007 quarter. The latest quarterly rise is the largest since the June 1985 quarter, when the index rose by 4.5 percent. Electricity generation and supply, and wholesale trade were the major contributors to the rise in the June 2008 quarter.
Producers Price Index
Outputs – all industries |
| Quarter |
Percentage change from previous quarter |
Percentage change from same quarter, previous year |
Jun 2006
Sep 2006
Dec 2006
Mar 2007
Jun 2007
Sep 2007
Dec 2007
Mar 2008
Jun 2008 |
2.9 R
1.0
-0.6 R
-0.2
1.2
1.6
1.4 R
1.8
3.5 |
5.7 R
4.9
4.1
3.1
1.4 R
2.0 R
4.0
6.1
8.5 |
R Revised
The electricity generation and supply index (up 30.9 percent) made the largest contribution to the rise in output prices in the June 2008 quarter. The rise in this index followed a 16.4 percent rise in the March 2008 quarter and a 5.3 percent fall in the December 2007 quarter. The latest quarterly rise is the largest since the series began in the June 1994 quarter. This index was driven up by prices for electricity generation, with respondents reporting that lower lake levels had pushed up the spot prices. In the year to the June 2008 quarter, the electricity generation and supply index rose 41.7 percent, the largest annual movement since the series began in the June 1994 quarter.
The wholesale trade index (up 6.0 percent) made the second largest contribution to the rise in output prices. The latest rise in this index follows five consecutive quarterly rises, and is the largest rise since the series began in the June 1994 quarter. As in the previous two quarters, the main driver of the index was mineral, metal and chemical wholesaling, as a result of higher prices for fuel. In the year to the June 2008 quarter, the wholesale trade index rose 13.8 percent, which is also the largest annual movement since the series began in the June 1994 quarter.
The livestock and cropping farming index rose 8.2 percent in the June 2008 quarter, counteracting the 8.4 percent fall in the March 2008 quarter. Higher prices for prime lamb and beef livestock were the main contributors to the rise this quarter. In the year to the June 2008 quarter, the livestock and cropping farming index rose 8.9 percent, compared with falls of 2.5 percent in the year to the June 2007 quarter and 5.9 percent in the year to the June 2006 quarter.
The finance index (down 1.3 percent) made a very small downward contribution to the overall rise in output prices. This latest movement follows a 0.8 percent fall in the March 2008 quarter and a 0.4 percent rise in the December 2007 quarter. Lower prices for financial intermediation services drove the finance index down. In the year to the June 2008 quarter, the finance index fell 5.5 percent, compared with falls of 3.0 percent in the year to the June 2007 quarter and 2.2 percent in the year to the June 2006 quarter.
In the year to the June 2008 quarter, the PPI outputs index rose 8.5 percent. This annual movement is the largest since a 9.6 percent rise in the year to the September 1987 quarter.
Inputs
Input prices for all industries in the PPI rose 5.6 percent in the June 2008 quarter, which was the largest quarterly rise since the March 1980 quarter. The latest quarterly rise compares with rises of 2.3 percent in the March 2008 quarter and 1.4 percent in the December 2007 quarter.
Producers Price Index
Inputs – all industries |
| Quarter |
Percentage change from previous quarter |
Percentage change from same quarter, previous year |
Jun 2006
Sep 2006
Dec 2006
Mar 2007
Jun 2007
Sep 2007
Dec 2007
Mar 2008
Jun 2008 |
2.9 R
1.8
-0.3 R
-1.6 R
1.4 R
2.1 R
1.4 R
2.3
5.6 |
8.0
7.0
5.3 R
2.8 R
1.3 R
1.6 R
3.3 R
7.3 R
11.8 |
R Revised
The electricity generation and supply index made the most significant upward contribution to the PPI inputs index with a 50.8 percent rise in the June 2008 quarter – the largest quarterly rise since the series began in the June 1994 quarter. The rise followed a 41.7 percent rise in the March 2008 quarter and falls of 7.8 percent and 5.8 percent in the December 2007 and September 2007 quarters, respectively. Respondents cited lower lake levels as the main reason for increased electricity generation and supply prices in the latest quarter. Higher electricity generation costs cause increases in spot prices in the wholesale electricity market, which have an upward effect on prices for producers across the economy. In the year to the June 2008 quarter, the electricity generation and supply index rose 85.4 percent compared with a 12.7 percent fall in the year to the June 2007 quarter and a 23.6 percent rise in the year to the June 2006 quarter. The latest annual increase is the highest recorded since the series began.
The second most significant contribution to the PPI inputs index came from the wholesale trade index. The index rose 6.4 percent which is its fifth consecutive quarterly rise since a 7.9 percent fall in the March 2007 quarter. The latest quarterly rise in the wholesale trade index was mainly driven by a rise in the mineral, metal and chemical wholesaling index (in turn due to increases in prices for crude oil and natural gas condensate). In the year to the June 2008 quarter, the wholesale trade index rose 16.5 percent. This rise compared with a 1.4 percent fall in the year to the June 2007 quarter and a 20.9 percent rise in the year to the June 2006 quarter.
The air transport index (up 13.0 percent) made the third most significant upward contribution to the PPI inputs index. The rise in this index followed rises of 4.3 percent in the March 2008 quarter and 4.4 percent in the December 2007 quarter, and was the fifth consecutive quarterly rise since a 4.3 percent fall in the March 2007 quarter. Higher prices for aviation fuel and kerosene jet fuel were the main drivers of the rise in the latest quarter. In the year to the June 2008 quarter, the air transport index rose 28.0 percent compared with a 7.0 percent fall in the year to the June 2007 quarter and a 21.1 percent rise in the year to the June 2006 quarter.
In the June 2008 quarter, other significant upward contributions to the PPI input index came from the meat and meat product manufacturing index (up 9.5 percent), the construction index (up 2.6 percent), and the sheet and fabricated metal product manufacturing index (up 12.2 percent). There were no downward contributors to offset the rise in input prices in the quarter.
Input prices for all industries rose 11.8 percent in the year to the June 2008 quarter, compared with rises of 1.3 percent in the year to the June 2007 quarter and 8.0 percent in the year to the June 2006 quarter. The latest annual increase is the largest recorded since a 15.9 percent rise in the year to the September 1985 quarter.
Commodities
In the June 2008 quarter, the electricity: commercial consumers index recorded its largest quarterly increase (up 36.6 percent) since the series began in the June 1994 quarter. Previous movements for this index were an 11.3 percent rise in the March 2008 quarter and a 9.6 percent fall in the December 2007 quarter. Higher average prices were charged to commercial users as a result of higher spot prices in the market (as cited by respondents). In the year to the June 2008 quarter, the electricity: commercial consumers index rose 40.8 percent, compared with a 10.9 percent fall in the year to the June 2007 quarter.
The fertiliser index rose 5.3 percent in the June 2008 quarter, following a 15.6 percent rise in the March 2008 quarter. Higher prices were recorded for phosphatic fertilisers, with higher supplier prices and demand the main reasons cited by respondents for the price increases. In the year to the June 2008 quarter, the fertiliser index rose 37.3 percent, the largest annual increase since the series began in the June 1994 quarter. This rise compares with rises of 5.2 percent in both the years to the June 2007 and June 2006 quarters.
For the first time since the December 2006 quarter, the dairy products (excluding milk and ice cream) index fell (down 0.3 percent). This fall comes after large quarterly rises of 14.5 percent in the March 2008 quarter and 16.1 percent in the December 2007 quarter. Price movements within this index were mixed, with exported skim milk powder making the largest contribution to the overall downward movement. In the year to the June 2008 quarter, the dairy products index rose 43.3 percent compared with a 2.3 percent fall in the year to the June 2007 quarter.
The processed meat: beef index rose 11.4 percent in the June 2008 quarter, following a 3.5 percent rise in the March 2008 quarter and a 4.5 percent fall in the December 2007 quarter. This latest rise was driven by higher export prices for boneless cuts of beef. In the year to the June 2008 quarter, the processed meat: beef index rose 12.1 percent compared with an 11.2 percent fall in the year to the June 2007 quarter.
The livestock: sheep and lamb index rose 10.4 percent in the June 2008 quarter, following a 14.4 percent fall in the March 2008 quarter and 6.7 percent rise in the December 2007 quarter. This index was driven up by the higher prices farmers received for prime lamb livestock. In the year to the June 2008 quarter, the sheep and lamb index rose 10.6 percent compared with falls of 6.6 percent in the year to the June 2007 quarter and 16.9 percent in the year to the June 2006 quarter.
The livestock: cattle index also rose in the June 2008 quarter (up 8.4 percent). This rise followed an 8.2 percent fall in the March 2008 quarter and a 0.9 percent rise in the December 2007 quarter. This index was driven up by the higher prices farmers received for prime bulls and steers. In the year to the June 2008 quarter, the livestock: cattle index rose 7.6 percent compared with a 3.4 percent fall in the year to the June 2007 quarter and a 1.4 percent rise in the year to the June 2006 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 June 2008 quarter. The table below shows changes in the value of the New Zealand dollar in foreign currency denominations from the March 2008 quarter to the June 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 February 2008
15 May 2008 |
0.7844
0.7572 |
0.3982
0.3886 |
0.8690
0.8052 |
84.2953
79.0570 |
0.5341
0.4878 |
| Percentage change |
-3.5 |
-2.4 |
-7.3 |
-6.2 |
-8.7 |
Source: Westpac Banking Corporation.
Revisions
During the processing of the Producers Price Index (PPI) for the June 2008 quarter, errors were identified which have led to the revision of some historical series. These errors occurred in the treatment of several prices that are denominated in foreign currencies. As a result of these errors being identified, the following series were revised, in some cases from the September 1998 quarter onwards. At higher levels of aggregation, the impact is minimal.
Please note that the tables included in this Hot Off The Press only show data from the last two years. If you require data relating to earlier periods, please email info@stats.govt.nz .
PPI outputs
All industries (PPIQ.SU9)
Agriculture, forestry and fishing (PPIQ.SUA)
Livestock and cropping farming (PPIQ.SUA02)
Forestry and logging (PPIQ.SUA06)
Manufacturing (PPIQ.SUC)
Wood product manufacturing (PPIQ.SUC07)
Petroleum, coal and basic chemical manufacturing (PPIQ.SUC10)
Machinery and equipment manufacturing (PPIQ.SUC16)
Electricity generation and supply (PPIQ.SUD01)
Business services (PPIQ.SUL04)
Chemicals, petroleum and plastics (PPIQ.SUX09)
Machinery and metal products (PPIQ.SUX12)
PPI inputs
All industries (PPIQ.SN9)
Agriculture, forestry and fishing (PPIQ.SNA)
Forestry and logging (PPIQ.SNA06)
Mining (PPIQ.SNB)
Manufacturing (PPIQ.SNC)
Wood product manufacturing (PPIQ.SNC07)
Paper and paper product manufacturing (PPIQ.SNC08)
Petroleum, coal and basic chemical manufacturing (PPIQ.SNC10)
Rubber, plastics and other chemical manufacturing (PPIQ.SNC11)
Sheet and fabricated metal product manufacturing (PPIQ.SNC14)
Transport equipment manufacturing (PPIQ.SNC15)
Machinery and equipment manufacturing (PPIQ.SNC16)
Education (PPIQ.SNN)
Agriculture (PPIQ.SNX01)
Chemicals, petroleum and plastics (PPIQ.SNX09)
Machinery and metal products (PPIQ.SNX12)
PPI selected commodities
Logs for export market (PPIQ.SC06)
International sea freight (PPIQ.SC19)
Note about the Farm Expenses Price Index
In future, the Farm Expenses Price Index will be produced for one quarter each year instead of quarterly. This change is due to reprioritisation of some parts of Statistics New Zealand's output programme. The date for the annual release has not yet been decided. We are consulting some key users about when the publication of the annual release would be most useful. If you would like more information about this change or would like to indicate when the publication of the annual release would be most useful for you, please contact Litia Tapu on 04 931 4344. Our release calendar will be updated once the decision has been made.
For technical information contact:
Mark Gordon or Stephanie Ye
Wellington 04 931 4600
Email: info@stats.govt.nz
Next release ...
Producers Price Index: September 2008 quarter will be released on
19 November 2008