GDP and Inflation

Prices of capital goods are on the up

Monday February 27, 2012 Jason Leung-Wai

 

The Capital Goods Price Index rose 0.4 percent in the December 2011 quarter, taking the annual increase to 1.1 percent. This slight upward trend follows a very subdued period where the index remains at the same level as the June 2009 quarter.
Five of the six asset groups rose in the December 2011 quarter, led by residential buildings, civil construction and plant, machinery and equipment.
On the year, the residential buildings price index has increased by 2.1 percent, the largest annual movement since the year to the December 2008 quarter.
The Civil construction index increased by 5.9 percent on the year, driven by higher prices for roading and materials for railway construction.
 
What is the Capital Goods Price Index?
The capital goods price index (CGPI) estimates the overall price change in a range of physical assets that the productive sector holds, acquires, or builds. The major asset groups are buildings, residential and non-residential; civil construction; land improvements; and plant, machinery, and equipment.
The CGPI is a price index that measures prices for purchases of new fixed assets, not existing ones. For example, second-hand trucks or buses, which may be heavily used by the productive sector, are not included in the CGPI. Similarly, the CGPI prices the construction of new buildings and additions. It does not price the existing stock of buildings.

The Capital Goods Price Index rose 0.4 percent in the December 2011 quarter, taking the annual increase to 1.1 percent. This slight upward trend follows a very subdued period where the index remains at the same level as the June 2009 quarter.

Five of the six asset groups rose in the December 2011 quarter, led by residential buildings, civil construction and plant, machinery and equipment.

On the year, the residential buildings price index has increased by 2.1 percent, the largest annual movement since the year to the December 2008 quarter.

The Civil construction index increased by 5.9 percent on the year, driven by higher prices for roading and materials for railway construction.

 

What is the Capital Goods Price Index?

The capital goods price index (CGPI) estimates the overall price change in a range of physical assets that the productive sector holds, acquires, or builds. The major asset groups are buildings, residential and non-residential; civil construction; land improvements; and plant, machinery, and equipment.

The CGPI is a price index that measures prices for purchases of new fixed assets, not existing ones. For example, second-hand trucks or buses, which may be heavily used by the productive sector, are not included in the CGPI. Similarly, the CGPI prices the construction of new buildings and additions. It does not price the existing stock of buildings.

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