Prices for plant and machinery continue to decline
New Zealand's high exchange rate has pushed prices for capital goods down further.Today's release of Statistics New Zealand's Capital Goods Index shows a fall of 1.1% in plant and machinery costs in the December quarter – a change mostly driven by f
Rob Hosking
Tue, 16 Feb 2010
New Zealand’s high exchange rate has pushed prices for capital goods down further.
Today’s release of Statistics New Zealand’s Capital Goods Index shows a fall of 1.1% in plant and machinery costs in the December quarter – a change mostly driven by falls in the exchange rate.
Earlier in the year prices were increasing and the figure for the year to December is an increase of 1.9%.
The overall capital goods index fell 0.2%. Second to plant and machinery was a fall in commercial buildings, where prices fell 1%.
Other business cost figures released today are more mixed. Prices for other business inputs have risen by 0.3% overall – but with some large increases contained within that figure.
Dairy prices are the largest contributor – up 15.2% - due to higher whole milk prices. That though will not affect all businesses.
What will be having a wider impact are electricity prices. These rose 6.7% for the quarter, mostly driven by rises in spot market prices.
Although it has been volatile throughout the year – prices fell 8.2% in the September quarter and rose 10.4% in June – the annual figure is 6.5%.
Reserve Bank governor Alan Bollard has frequently criticised the impact high electricity prices is having on inflationary pressures.
Rob Hosking
Tue, 16 Feb 2010
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