New Zealand Producer Price Index beats expectations but still softens to 0.7% from 0.8%

New Zealand's Producer Price Index (PPI) beat expectations, printing higher than forecasts for both the Output and Input components, but still receded from the previous quarter's figures.

According to Stats NZ, the Output PPI rose 0.7% for the quarter ended in December versus the forecast decline to 0.4%, edging down from the previous quarter's 0.8%. New Zealand's Input PPI for the same period printed at 0.9% compared to the expected 0.4%, but still fell back from the previous print of 1.2%.

Stats NZ noted that the largest output contributors were dairy cattle farming, up 7.3%, and real estate services which rose 1.1, helping to offset a 4.5% decline in dairy product manufacturing.

On the Input PPI side, dairy product manufacturing prices rose 5.5% while electrical and gas supply prices climbed 5.8%, with basic chemical and chemical product manufacturing adding a further 2.8%.

Market reaction

The NZD/USD is struggling to arrest a fall into 0.6165 in early Wednesday trading after the pair peaked above 0.6190 on Tuesday before pulling back in the midday rollover.

About New Zealand's Producer Price Index

The Producer Price Index Out released by the Statistics New Zealand is a measurement of the price changes of goods produced by the producers in New Zealand. Generally speaking, a price hike generates higher retail prices for consumers. Thus, a high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative (or bearish).

The Producer Price Index Input released by the Statistics New Zealand is a measurement of the rate of inflation experienced by producers. PPI Input captures changes in the average price of a fixed basket of goods and services purchased by the producers in New Zealand. A high reading is positive (or bullish) for the NZD, while a low reading is seen as negative (or bearish).

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