Capital goods prices rose 1.5 percent in the June 2004 quarter compared with the March 2004 quarter, according to Statistics New Zealand. This is the largest quarterly increase in the Capital Goods Price Index (CGPI) since a 2.2 percent rise in the December 2000 quarter. On an annual basis, the CGPI rose 3.6 percent from the June 2003 quarter to the June 2004 quarter.

The most significant contribution to the overall increase for the June 2004 quarter came from a 2.6 percent increase in the residential buildings index. The main reasons cited by respondents for this quarter’s increase were higher prices for construction components and the rising costs of subcontractors’ charges. This is the seventh consecutive quarter in which the residential buildings index has been the most significant upward contributor to the CGPI. In the year to the June 2004 quarter, the residential buildings index rose by 9.8 percent. Another significant upward contribution in the June 2004 quarter came from the non-residential buildings index, which increased 4.1 percent. Increasing costs of construction materials were seen by respondents as the major reason for the price changes recorded this quarter.

The increases in the residential and non-residential buildings indexes were partly offset by a 0.1 percent fall in the plant, machinery and equipment index in the June 2004 quarter. A 7.3 percent fall in the computer machinery index was the most significant contributor to the decrease recorded in this index in the quarter.