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New Zealand producer inflation reaccelerates in Q2
Input PPI jumped to 2.9% quarter over quarter, about twice the pace of output PPI at 1.6%, raising concerns about squeezed margins.
New Zealand producer price pressures reaccelerated in the second quarter, with input producer price index inflation rising 2.9% quarter over quarter, up from 1.4% in Q1 and above the 1.3% expected, according to Action Forex, citing Stats NZ data.
Output prices also strengthened, with output PPI increasing 1.6% quarter over quarter versus 0.8% in Q1, compared with expectations of 0.8%, while Stats NZ said producers faced higher costs for inputs including fuel, power, and raw materials.
The spread between input and output prices was especially notable, with producers’ costs rising almost twice as fast as prices received, a dynamic Action Forex said could pressure margins if companies cannot pass higher costs through.
Other cost components were broader across the economy, including a 3.8% quarter over quarter rise in the Farm Expenses Price Index and a 1.8% increase in the Capital Goods Price Index, and Action Forex said the key question is whether businesses keep absorbing costs or increasingly pass them into final prices.