Farm input inflation twice CPI

Sheep and beef farm input prices rose twice as fast as consumer price inflation in the year to March, with on-farm inflation at 3%, Beef + Lamb New Zealand Economic Service's sheep and beef on-farm inflation report showed.

The report identified annual changes in the prices of goods and services purchased by sheep and beef farms.

The most significant price increases were for shearing expenses (up 11.2%), fertiliser, lime and seeds (up 6.2%) and rates (up 5.1%) and those three categories contributed substantially to the 3% rate of on-farm inflation, B+LNZ Economic Service chief economist Andrew Burtt said.

Excluding interest, on-farm inflation was 3.5% - the highest rate since the 2011-12 season, he said.

Low interest rates continued to be important because interest expenditure accounted for 14% of total farm expenditure, which made it the second-largest category of sheep and beef farm expenditure.

In contrast, consumer price inflation, which was measured by the consumer price index, was up 1.5% in the year to March 2019. Over the past decade, the CPI has increased 6.8 percentage points more than on-farm inflation.

 

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