INDEPENDENT NEWS

NZ Producer Prices (September 2000 Quarter)

Published: Fri 24 Nov 2000 04:03 PM
Data Flash (New Zealand) NZ Producer Prices (September 2000 Quarter)
Key Points Producer input prices rose 3.8% qoq in Q3 and were 8.0% higher than last year (market expectations: +1.5%).
Producer output prices rose 2.7% qoq and were 5.6% higher than in 1999 (average expectation: +1.2%).
The outturn reflected the direct effect of higher commodity prices (oil and export commodities) and the increasing momentum of flow-on effects into other production sectors. Output prices rose by 7.8% qoq in the agriculture and forestry sector, 3.6% qoq in the manufacturing sector, 3.5% qoq in wholesale trade, 1.5% qoq in retail trade, 1.3% qoq in the transport sector.
Commentary Producer price data continues to confirm significant upstream price pressure in the NZ economy. The correlation between PPIs and the CPI reinforces our view that CPI inflation will rise to nearly 4% by the middle of next year. That projection assumes ongoing pressure on producer margins, which implies that there will be resistance to immediately passing on lower costs once oil prices begin to fall next year and the NZD gains some upward momentum. As a result of the re-building of margins, CPI inflation above 3% is likely to be more persistent than has been suggested by RBNZ projections. That, in turn, raises the risk of second-round effects through higher wage inflation. Our assessment of the inflation outlook relative to the mid-point of the 0-3% target band supports our expectation of further RBNZ tightening steps next year - beginning with a 25 bps increase in the OCR on 15 March.
Ulf Schoefisch, Chief Economist, New Zealand, (64) 9 351 1375
This, along with an extensive range of other publications, is available on our web site http://research.gm.db.com
In order to read our research you will require the Adobe Acrobat Reader which can be obtained from their website http://www.adobe.com for free.

Next in Business, Science, and Tech

Services lead GDP growth
By: Statistics New Zealand
Letter to Immigration Minister From Early Harvesting Growers
By: One Plus One
Scientists discover one of world’s oldest bird species
By: Canterbury Museum
Helping regions fill skills shortages and Kiwis come first
By: New Zealand Government
Report: Govt Inquiry into Auckland Fuel Supply Disruption
By: Inquiry into The Auckland Fuel Supply Disruption
NZ economy grows 0.5% in June quarter, beating expectations
By: BusinessDesk
Don’t blame President Trump for slowing economy
By: New Zealand National Party
Labour's big government economic policies continue to fail
By: ACT New Zealand
Kiwi economic growth slows. We need fiscal caffeination
By: Kiwibank
Weakening economic growth shows need for tax cuts
By: New Zealand Taxpayers' Union
Employers pen open letter to Minister in ‘desperation’
By: New Zealand National Party
Dismissive Minister out of touch with reality
By: ACT New Zealand
Labour issues in booming sector
By: Bayleys
Migrant Workers Association criticises work visa overhaul
By: RNZ
More detail needed on migrant worker policy
By: BusinessDesk
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media