Capital goods prices ease slightly

The capital goods price index (CGPI) fell 0.1 percent in the March 2010 quarter, Statistics New Zealand said today. The index measures the change in price of new capital equipment. In the year to the March 2010 quarter, the CGPI fell 0.4 percent, the first annual decrease since the December 1998 quarter.

The major downward contribution to the CGPI came from the plant, machinery, and equipment index, which fell 0.6 percent in the March 2010 quarter. This index measures items such as computer machinery, furniture, and machinery for mining, quarrying, and construction. Discounting for furniture and electronic equipment contributed to this quarter's decrease.

The second most significant downward contribution to the CGPI came from the non-residential buildings index, which fell 0.1 percent in the March 2010 quarter. Falling material prices for items such as stainless steel, along with lower local demand were cited as the main reasons for the fall.

The transport equipment index rose 0.5 percent in the March 2010 quarter, reflecting higher prices for light commercial vehicles and helicopters. For helicopters, the increase was driven by a weaker New Zealand dollar.

The CGPI measures the change in price of physical capital goods purchased by New Zealand producers of goods and services. Capital goods are assets used to produce goods and services for more than one year.