WELLINGTON, Feb 16 (Reuters) - New Zealand producer prices
fell sharply in the fourth quarter on cheaper oil prices, showing
inflation pressures easing and posing no obstacle to lower
interest rates.
Producers' input prices -- the cost of goods and services, excluding labour, at the farm and factory gate -- fell 2.2 percent on the previous quarter, output prices were up 1.4 percent, official data showed on Monday.
Economists polled by Reuters had expected a rise of 0.2 percent in both input and output prices.
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KEY POINTS:
- Input prices driven by lower oil prices, output powered by higher export prices for dairy products.
- Both output and input prices lower for electricity prices due to lower demand and an increase in the hydro lake levels.
- Input prices up 9.7 percent on year ago. Output prices up 9.9 percent on year earlier.
- Click on for table.
- In a separate release, the capital goods price index rose 1.1 percent in Q4, against 1.4 percent rise in previous quarter as prices for equipment and machinery rise, but falls in construction prices of new houses and buildings.
COMMENTARY: PHILIP BORKIN, ECONOMIST, ANZ-NATIONAL BANK
'The increase in output prices is a little bit of a surprise, and the drivers of the increase are also a bit surprising, being dairy and petroleum-related, although I guess that's timing related.
'The bottom line is that you can't take too much from this data, because it is old news now, the key story is that business margins did post a small recovery, and that is some positive news.'
ROBIN CLEMENTS, SENIOR ECONOMIST, UBS
'At a glance its dairy, which we've seen coming through in the commodity prices, and oil, which we've seen plunge, so there's not much implication.
'Input prices are going down and output up a bit, so that implies maybe healthier margins.'
MARKET REACTION:
- The New Zealand dollar was a shade softer at $0.5213/23 after the release. The March bank bill contract also softened, with the yield rising a tick to 3.15 percent compared with the 3.5 percent official cash rate.
LINKS:
- The full data is available at the Statistics New Zealand Web site: www.statistics.govt.nz
- For all New Zealand news and data, 3000 Xtra users can click on
BACKGROUND:
- Consumer prices fell 0.5 percent in the fourth quarter, mainly because of cheaper petrol and food prices. The annual rate slowed 3.4 percent.
- The New Zealand economy has been in recession since the beginning of 2008, the first in more than a decade. Forecasters are now expecting the weakness to go into the middle of 2009 because of the deteriorating global outlook.
- The Reserve Bank of New Zealand is expected to cut rates between 50 and 100 basis points in its March 12 monetary policy statement. Since last July it has cut rates by 475 basis points to 3.5 percent. Keywords: NEWZEALAND ECONOMY/PPI (Wellington newsroom +64 4 471 4234, fax +64 4 4736 212, wellington.newsroom@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Producers' input prices -- the cost of goods and services, excluding labour, at the farm and factory gate -- fell 2.2 percent on the previous quarter, output prices were up 1.4 percent, official data showed on Monday.
Economists polled by Reuters had expected a rise of 0.2 percent in both input and output prices.
***************************************************************
KEY POINTS:
- Input prices driven by lower oil prices, output powered by higher export prices for dairy products.
- Both output and input prices lower for electricity prices due to lower demand and an increase in the hydro lake levels.
- Input prices up 9.7 percent on year ago. Output prices up 9.9 percent on year earlier.
- Click on for table.
- In a separate release, the capital goods price index rose 1.1 percent in Q4, against 1.4 percent rise in previous quarter as prices for equipment and machinery rise, but falls in construction prices of new houses and buildings.
COMMENTARY: PHILIP BORKIN, ECONOMIST, ANZ-NATIONAL BANK
'The increase in output prices is a little bit of a surprise, and the drivers of the increase are also a bit surprising, being dairy and petroleum-related, although I guess that's timing related.
'The bottom line is that you can't take too much from this data, because it is old news now, the key story is that business margins did post a small recovery, and that is some positive news.'
ROBIN CLEMENTS, SENIOR ECONOMIST, UBS
'At a glance its dairy, which we've seen coming through in the commodity prices, and oil, which we've seen plunge, so there's not much implication.
'Input prices are going down and output up a bit, so that implies maybe healthier margins.'
MARKET REACTION:
- The New Zealand dollar was a shade softer at $0.5213/23 after the release. The March bank bill contract also softened, with the yield rising a tick to 3.15 percent compared with the 3.5 percent official cash rate.
LINKS:
- The full data is available at the Statistics New Zealand Web site: www.statistics.govt.nz
- For all New Zealand news and data, 3000 Xtra users can click on
BACKGROUND:
- Consumer prices fell 0.5 percent in the fourth quarter, mainly because of cheaper petrol and food prices. The annual rate slowed 3.4 percent.
- The New Zealand economy has been in recession since the beginning of 2008, the first in more than a decade. Forecasters are now expecting the weakness to go into the middle of 2009 because of the deteriorating global outlook.
- The Reserve Bank of New Zealand is expected to cut rates between 50 and 100 basis points in its March 12 monetary policy statement. Since last July it has cut rates by 475 basis points to 3.5 percent. Keywords: NEWZEALAND ECONOMY/PPI (Wellington newsroom +64 4 471 4234, fax +64 4 4736 212, wellington.newsroom@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.