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 offsetting higher building costs in the December quarter.
Statistics New Zealand figures on the Capital Goods Price Index showed capital goods prices were flat overall in the quarter.
The residential buildings index rose 0.5 per cent in the quarter, while civil construction for such things as 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.
- © Fairfax NZ News
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