- ASB Bank
New Zealand producer input and output prices fell in the first quarter, mainly driven by lower fuel prices and weaker output prices for sheep, beef, grain and dairy farmers, suggesting inflationary pressures remain tepid. Input prices dropped 1% in the first quarter for an annual decline of 0.9%, while output prices decreased 0.2% in the quarter for a 0.1% annual gain, according to Statistics New Zealand. Input costs for the petroleum and coal manufacturing sector tumbled 22% last quarter and are half what they were in mid 2012, following the sharp drop in global oil prices since then. Dairy product manufacturing input costs were 4.5% lower in the same quarter but output prices increased 3.4%. The business price indexes come a day after the release of the RBNZ's quarterly survey, which showed expectations for inflation one year out climbed to 1.22% from 1.09% in the previous survey, which was the lowest reading since 1994, while the two-year ahead gauge barely ticked up to 1.64% from 1.63%. Persistently weak inflation adds to the case for the RBNZ to trim the official cash rate a quarter point to 2% as soon as its June meeting.
Meanwhile, Fonterra's biweekly auction showed a rebound of the GDT Price Index. The GDT Price Index surged 2.6% with the average price reaching $2.283 per metric ton, following the 1.4% decline to $2,203 per metric ton booked on May 3.
© Dukascopy Bank SA