Capital goods prices flat in December quarter
The high New Zealand dollar is holding down the cost of capital goods, with lower costs for plant and machinery, as well as transport equipment in the December quarter, offsetting higher building costs.
Statistics New Zealand figures on the Capital Goods Price Index showed capital goods prices were flat overall in the December quarter.
The residential buildings index rose 0.5 per cent in the quarter, while civil construction for things like roads and bridges, rose 0.7 per cent. Non-residential building prices were up 0.3 per cent.
But those factors were offset by a 0.9 per cent drop in prices for plant, machinery and equipment. Transport equipment was down 0.4 per cent.
Infometrics economists said the rising New Zealand dollar would have pushed costs down early this year, but rising building costs would see the index rise later in the year.
Plant and transport equipment prices should have dropped sharply in the March quarter, with the New Zealand dollar up 22 per cent against the yen and more than 5 per cent against the US dollar.
The New Zealand dollar was at US84.6c today and 79 yen.
For the year, capital goods used by New Zealand producers were up 0.9 per cent.