Talking Points:
- New Zealand producer prices slipped back a little in the first quarter
- Higher dairy and oil costs supported both input and output prices
- The New Zealand Dollar market wasn’t much concerned however
Find out what investors think of the New Zealand Dollar’s prospects at the DailyFX Sentiment Page
The New Zealand Dollar didn’t move far Wednesday on the release of slightly weaker producer price data.
The official Producer Price Index for outputs came in with a 1.4% rise compared to the last quarter of 2016. The previous quarter’s rise had been 1.5% Input prices rose by 0.8%, just below the 1% recorded last time.
Output prices represent the cost of producers’ goods at the factory gate, while input prices are the cost of goods used in their production processes. StatisticsNZ said that output prices were supported by higher dairy prices- dairy is a vitally important sector for the local economy. Higher oil prices over the period pushed up input costs at oil refineries, with prices paid by refiners up a sobering 43%.
Although often an important upstream component of overall inflation, PPI data tend to have less currency impact than consumer price data for the simple reason that they are less important in central bank interest-rate setting. Wednesday’s release didn’t buck that trend, leaving NZD/USD where it was before hand after a modest wobble.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
