Residential building costs push up CGPI

The Capital Goods Price Index (CGPI) rose 0.4 percent in the June 2007 quarter mainly due to higherconstruction prices for new houses, Statistics New Zealand said today.

This follows a similar rise of 0.3percent in the March 2007 quarter. In the year to the June 2007 quarter, the CGPI rose 2.8 percentcompared with 3.5 percent in the year to June 2006.

The residential buildings index rose 1.4 percent in the June 2007 quarter and made the most significantupward contribution to the CGPI.

Higher construction prices for new houses was the main reason for thisrise, driven by the high cost of construction components and increased subcontractors' charges.

In the yearto the June 2007 quarter, the residential buildings index rose 5.1 percent.Another upward contribution to the CGPI came from the other construction index, which rose 0.4 percent.

The increase was driven by higher costs for the construction of water supply systems (mainly due to highercosts of aluminium tubes and pipes).

In the year to the June 2007 quarter, the other construction index rose3.1 percent compared with 5.8 percent in the year to the June 2006 quarter.

The plant, machinery and equipment index fell 0.4 percent, which produced the main downward effecton the CGPI this quarter.

This was the first quarterly fall in this index since the December 2005 quarter.

Prices fell for other special purpose machinery (particularly printing machinery), partly due to theappreciation of the New Zealand dollar in the June 2007 quarter