BusinessDesk: Producers receive lower prices in 1Q on falling commodity prices, strong dollar

New Zealand producers were squeezed in the first quarter, receiving lower prices for their products as global commodity prices fell and the kiwi dollar remained strong, while their input prices rose.

The Producers Price Index's output prices, which measure the price received for locally produced goods and services, fell 0.1 percent in the three months ended March 31, Statistics New Zealand said.

Prices received by food manufacturers fell 1.4 percent in the quarter, leading the decline, due to "lower international prices for meat and dairy products compounded by the appreciating dollar during the period," Statistics NZ said.

The kiwi dollar rose 5.2 percent against the greenback during the quarter, but has since shed those gains, recently trading at 76.44 US cents.

On an annual basis, output prices rose 1.6 percent.

Fonterra Cooperative Group's lower forecast pay-out to farmers contributed to a 2.2 percent fall in the prices received for dairy cattle farming. Dairy cattle farming prices received were 14 percent lower than March 2011.

The PPI's input prices, which measure the prices paid by the productive sector, rose 0.3 percent in the quarter, with an 8.4 percent increase in electricity and gas supply costs driving the increase.

Input prices rose 2.3 percent on an annual basis.

Food manufacturing prices fell 1.2 percent in the quarter with cheaper pricing for primary products such as wool, milk, fish and wood.

In a separate release, Statistics NZ said the price of purchasing new capital items was unchanged from the December quarter, with increases in residential building and civil construction offset by falling prices for plant, machinery and equipment, and transport equipment.

(BusinessDesk)