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Production prices still lifted by milk

NZN 19/02/2017 Rebecca Howard

New Zealand producer input and output prices rose in the fourth quarter, once again lifted largely by rising milk prices.

Prices paid by producers - input prices - rose 1 per cent in the three months ended December 31, while output prices, or prices received by producers, rose 1.5 per cent, Statistics New Zealand said.

Producer output prices were mainly influenced by higher prices received by dairy product manufacturers, up 14 per cent and higher farm-gate milk prices received by dairy cattle farmers, up 13 per cent, the department said.

Prices for whole milk powder picked up in the second half of 2016, following a prolonged slump, as demand and supply moved back into balance, with the average price for whole milk powder rising almost two-thirds by December from July.

"Producer prices were driven by a higher forecasted farmgate milk price, which rose to $6.00 a kilo in mid-November 2016.

This compares to $4.60 a kilo a year before, and $8.65 a kilo in the March 2014 quarter, when prices received by dairy cattle farmers were at their peak," business prices manager Sarah Williams said.

Prices received by producers in the mining and construction industries were also up, by 13 per cent and 1.6 per cent respectively.

Construction prices were affected by labour and material costs, Statistics New Zealand said.

On the input side, prices were mainly influenced by prices paid by dairy product manufacturers, up 11 per cent, due to the increase in farm-gate milk prices, Statistics New Zealand said.

A 5.7 per cent rise in petrol prices and an 8.5 per cent jump in diesel also contributed to higher input prices paid by producers across many industries.

Prices paid by farmers were unchanged in the quarter and fell by 0.2 per cent on the year while capital goods prices were up 1.1 per cent in the latest quarter for an annual increase of 3.4 per cent.

In the 12 months to December, producer output prices increased 2.5 per cent, and producer input prices increased 2.3 per cent.

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