19 May 2009

Costs fall for farm, factory producers

7:55 am on 19 May 2009

Recession-plagued farm and factory producers may have experienced some relief in their margins over the first three months of this year.

Statistics New Zealand's figures show input prices at the farm and factory gate fell 2.5% as oil prices fell.

The drop, which is the largest since records began in 1977, outstripped a 1.4% drop in output prices, which was driven by falling dairy export prices.

UBS senior economist Robin Clements says the figures indicate firms reclaimed some of their margins, while inflation abated.

He says input prices may have further to fall, which is currently the only avenue for producers to further restore their margins.

Other data indicates the cost of capital goods rose 1.2% in the first quarter, as the fall in the New Zealand dollar pushed up the cost of plant machinery and equipment.