On the September 2009 quarter, the producers’ price Index (PPI) outputs index fell 1.4 percent, while the PPI inputs index fell 1.1 percent.
On the September 2009 year, output prices have fallen by 2.1 percent, while input prices have fallen 5.8 percent.

This easing in producers’ prices began a year ago, after two and a half years of rapid growth. The fall in output prices have been driven by the dairy sector, while on the input prices side, dairy is joined by electricity generation and supply.

Pushing output prices down in the September 2009 quarter was the dairy cattle farming index, which was down 24.3 percent on the quarter, driven by lower farmgate prices for whole-milk. On the year, the dairy cattle farming index has fallen by 26.1 percent. However, to put this in context, prices had risen by 25 percent in each of the previous September years.

The other sub-index pushing output prices down was the dairy product manufacturing index, which was down 10.9 percent on the September quarter, following falls of 19.9 percent and 24.3 percent in the previous two quarters. The main drivers in the latest quarter were lower prices for exported dairy products. On the year, the dairy product manufacturing index fell 35.6 percent, following increases of 27 and 11 percent in the previous two September years.

On the inputs, the dairy product manufacturing index was down 20.9 percent on the September 2009 quarter, again driven by lower whole-milk prices at the farmgate. On the year, the dairy product manufacturing index was down 22 percent, although this followed increases of 23 percent and 27 percent in the previous two years.

Also pushing the inputs index down was electricity generation and supply, falling 8.2 percent on the quarter and 32.4 percent on the year. The main reasons cited for the fall in prices was market conditions, higher hydro inflows, seasonal conditions and lower prices for natural gas.