New Zealand producer price pressures accelerated sharply in Q2, with input PPI rising 2.9% q/q from 1.4% in Q1, more than double 1.3% consensus. Output PPI also strengthened, rising 1.6% from 0.8%, twice 0.8% expected. Stats NZ said producers faced higher costs for inputs including fuel, power and raw materials.
The gap between input and output prices was particularly notable. Producers’ costs rose almost twice as fast as prices received for their goods and services, pointing to potential pressure on margins if firms are unable to pass those increases through. Consumer prices rose 1.5% q/q over the same period, slightly below output PPI and well below input-cost growth.
Cost pressures were broader across the economy. Farm Expenses Price Index rose 3.8% q/q, while Capital Goods Price Index increased 1.8%. Overall, Q2 data show a clear reacceleration in upstream inflation, with key question now whether businesses continue absorbing higher costs or increasingly pass them into final prices.
Data Summary
| Indicator | Actual | Expected | Previous |
|---|---|---|---|
| PPI Input q/q | 2.9% | 1.3% | 1.4% |
| PPI Output q/q | 1.6% | 0.8% | 0.8% |
| CPI q/q | 1.5% | — | 0.9% |
Key Takeaways
- New Zealand producer cost pressures accelerated sharply in Q2, with PPI Input rising from 1.4% to 2.9% q/q, more than double 1.3% consensus.
- PPI Output increased from 0.8% to 1.6%, also twice 0.8% expected.
- Input costs rose substantially faster than output prices, suggesting businesses either absorbed part of increase through margins or still have costs to pass through.
- Stats NZ highlighted higher fuel, power and raw-material prices as important contributors to input-cost increase.
- Producer input inflation at 2.9% was nearly twice Q2 CPI increase of 1.5%, highlighting strength of upstream cost pressures.
- Broader cost measures were also firm, with Farm Expenses Price Index up 3.8% and Capital Goods Price Index up 1.8%.
- Overall, Q2 data show a clear reacceleration in production costs, with future inflation impact depending on how much businesses pass through to customers.
