Dairy helps drive annual growth in wholesale prices

Annual manufacturing prices climbed 1.8% in April, with growth in dairy delivering a particular boost to the wholesale price index (WPI) from the Central Statistics Office (CSO).

The data published today, May 22, showed dairy products were up 18.4%, and other food products including bread and confectionary rose 5.7%, over the year.

However, the wholesale price index was down 0.7% on a monthly basis despite an increase of 1.9% in meat and meat products, with a decrease of 2.7% in basic pharmaceuticals depressing the index.

The collection of producer and wholesale prices for the calculation of the index, published on a monthly basis, is used as a short-term indicator of the business cycle.

According to the figures, the monthly price index for exports and for home sales was down 0.6% and 1%, respectively, although the annual index on exports was up 1.6% due to currency fluctuations.

The data coincides with fresh volatility in the foreign exchange markets, with the British pound dropping below US$1.30 earlier today amid uncertainty over the UK general election next month.

Figures published last week showed currency pressures caused by Brexit have already constrained growth in exports to the UK, with a decline in demand for Irish food products the primary reason for the slump.

Last week, data from the European Commission showed butter prices across Europe reached a record high, with wholesale averages of €439 per 100kg.

Meanwhile, Ornua CEO Kevin Lane pledged to “guard” milk prices at 28-32c/L in a bid to overcome an extended period of volatility after the company posted “a strong trading performance” in 2016.

And, at a meeting last week, the board of Dairygold decided to hold its milk price at 31.5c/L, including VAT, for milk produced during the month of April. The company last raised its milk price by 1c/L in January.