Forecast sees prices heading downwards

Press, 25 February 1983, Page 9

Forecast sees prices heading downwards

PA Wellington Prices for manufactured goods will head downwards over the next few months, the director-general of the Manufacturers’ Federation, Mr David Walker, has predicted. He was commenting on the latest producers price index, which shows that the price level for inputs of goods and services, except labour, paid in the December, 1982, quarter rose 12.2 per cent, the lowest rise since 1978. Industry output prices — the price, including the cost of labour, at which the product leaves the factory — went up 11.4 per cent, also the lowest annual increase since December, 1981, quarter. That was an increase of 0.9 per cent over the September, 1982, quarter while the increase between the same quarters of 1981 was 3.2 per cent. The index clearly showed that manufacturers were contributing greatly to the fight against inflation, said Mr Walker. “In the last quarter of 1982 manufacturers’ output prices went up only 0.5 per cent. At the same time (manufacturers) input prices went up 0.9 per cent, which means that manufacturers have

been absorbing cost increases, some of which are the result of higher import prices,” he said. If continued, the quarterly increase of only 0.5 per cent would result in an annual rate of just over 2 per cent. “The producers price index ultimately flows through into consumer prices which must now head downwards very sharply over the next few months," Mr Walker said. The December, 1982, quarterly index rose 1 per cent on the September, 1982, quarter, compared with a 3.4 per cent increase for the same period in 1981. Industries with the largest input increases were food, beverages and tobacco,- with a 1.5 per cent rise caused

mainly by increased prices for milk and beef; local government, with 1.6 per cent; and agriculture, with 1.5 per cent, caused mainly by increased prices for livestock, superphosphate, and freight. The industry groups with the largest quarterly output price increases were ownership of dwellings which had a 2.4 per cent rise caused by rents, transport and storage with a 1.6 per cent rise caused by freight charges, and fishing and hunting up 3.5 per cent because of increased prices for fish and venison. The smallest increases were in textiles, apparel, leather, wood and wood products and communications, all at 0.2 per cent.