Higher electricity and farm-gate milk prices contributed to rises in both producer output and input prices in the September quarter.

Both the output producers price index, which shows the prices producers receive for their goods and services, and the inputs PPI, which shows how much they pay to produce things, rose 1 per cent in the September quarter, Stats NZ said. On an annual basis prices received by producers advanced 5.3 per cent while prices paid by producers increased 4.3 per cent.

Prices paid by farmers rose 0.4 per cent in the quarter and 1.6 per cent on the year while capital goods prices were up 0.5 per cent in the latest three months for an annual increase of 2.9 per cent.

"The drier winter has meant lower-than-usual lake levels for many of the country's hydroelectric power stations, which pushed up electricity generation costs," business prices manager Sarah Williams said in a statement.


Electricity and gas producers saw their input prices rise 5.9 per cent in the latest quarter, mostly due to higher electricity generation costs. In turn, they passed on a 5.3 per cent increase in their output prices. According to Stats NZ, electricity prices paid by commercial businesses rose 6.8 per cent in the September quarter.

The prices received by dairy cattle farmers rose 6.1 per cent, the sixth quarter in a row they have increased. The prices paid by dairy product manufacturers was up 5.1 per cent. Both price gains were influenced by higher forecasted farm-gate milk prices, Stats NZ said.

The recovery in global dairy prices also drove the annual movement, with prices received by dairy cattle farmers jumping 27.1 per cent in the September quarter from a year earlier while dairy product manufacturers' output prices rose 34.8 per cent. The annual increase in input prices was boosted by dairy product manufacturers whose costs were up 22.6 per cent.

Within other sectors, input costs for construction rose 0.6 per cent in the September quarter and 3.2 per cent on an annual basis while quarterly output prices gained 0.8 percent and were 4.2 per cent higher than a year earlier.