The New Zealand PPI (Producer Price Index) includes both inputs (such as raw materials, energy, and labor) and outputs (such as goods and services produced).
Both measures have come in lower than expected and lower than the previous quarter. Pointing to reduced price pressures in the NZ economy, at least at this wholesale level.
At the margin this will trim NZ rate hike expectations. The Reserve Bank of New Zealand next meet on May 24 and a +25 hike is expected.
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The PPI is published quarterly by Statistics New Zealand.
It covers three main sectors of the economy:
- agriculture, forestry, and fishing;
- mining;
- and manufacturing
The PPI can give insight into inflationary pressures in the economy
- an increasing PPI indicates that producers are facing higher costs which they may pass on to consumers in the form of higher prices, which can have a knock-on impact on downstream pricing, that is higher consumer level inflation . Which, of course, can trigger an RBNZ monetary policy response.
- a falling PPI is vice versa