RTTNews - Australia's producer prices dropped further in the second quarter, to record the steepest fall since the series first began in the fourth quarter of 1998, a report by the Australian Bureau of Statistics showed Monday.
Producer prices fell 0.8% sequentially in the second quarter, faster than a 0.4% drop in the first quarter, and above economists' expectations of a 0.2% decline. The drop was reflected in a 5.9% decline in import prices, while domestic prices remained flat.
The statistical bureau said the fall in producer price quarter-on-quarter was mainly due to a 5.6% drop in prices of industrial machinery, and equipment manufacturing, a 0.5% fall in building construction costs and a 10.5% decline in the cost of electronic equipment manufacturing. However, prices rose 2% for motor vehicle and part manufacturing and 5% in petroleum refining.
Compared to the previous year, producer prices increased at a slower pace of 2.1% in the second quarter compared to a 4% rise in the first quarter.
On the basis of the stage of production, producer prices at the preliminary stage of production decreased 2.7% sequentially in the three months ended June, with coal mining showing the steepest drop of 17.5%, followed by a 11.4% fall in prices of iron and steel. Annually, producer prices in the first stage of production was down 1.9%.
In the second stage of production, which includes intermediate goods, producer prices slipped 1.9% on a quarterly basis, reflecting a 11.8% drop in iron and steel prices as also a 17.5% fall in that of coal mining among others. In the year to June quarter, the prices were down 0.8%.
The latest data on producer prices also adds to concerns that the inflationary pressures in the Australian economy is weakening further. In another report released last week, the statistical office indicated that export and import prices dropped at record pace in the second quarter, owing to the appreciation of the Australian dollar.
The export price index dipped 20.6% sequentially in the second quarter, the largest quarterly fall since the series began in the September 1974 quarter. Moreover, the import price index dropped 6.4% quarter-on-quarter, marking the biggest quarterly decrease since the series began in the September 1981 quarter.
Meanwhile, most economists are also expecting the consumer price inflation to slow further in the second quarter, when the statistical bureau officially releases the data on July 22. Economists are expecting the consumer price index to rise 1.5% year-on-year in the second quarter, slowing from 2.5% increase in the preceding quarter.
However, sequentially, economists are expecting the prices to climb at a faster pace of 0.5% compared to a 0.1% increase seen in the first quarter.
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