What Is Capital Goods Price Index (CGPI)?

Capital Goods Price Index (CGPI) is an official statistical monitor of changes in fixed capital asset prices in New Zealand. The index tracks the change in costs for capital assets, which are used by companies and the New Zealand government to produce other goods.

The Capital Goods Price Index (CGPI) is part of the country's overall Business Price Index and one of the main indices for inflation measurement in the economy, which helps to guide monetary policy. The CGPI is produced every quarter.

Key Takeaways

  • The Capital Goods Price Index (CGPI) is a measure of producer price inflation for New Zealand's economy.
  • The CGPI estimates the overall price change in physical assets that the productive sector acquires or builds.
  • The major asset groups are buildings, both residential and non-residential; civil construction; land improvements; and plant, machinery, and equipment.
  • CGPI is a constituent of New Zealand's broader Business Price Index along with indices related to producer prices, farm prices, salaries and wages, and consumer goods and services prices. 
  • There is no corresponding index in the U.S. with New Zealand's Capital Goods Price Index (CGPI), though the Producer Price Index (PPI) captures two similar components for capital goods: materials and components for construction and materials and components for manufacturing.

Understanding the Capital Goods Price Index (CGPI)

Prepared by Stats NZ, a New Zealand government bureau, CGPI indicates changes in the cost of six types of physical capital assets:

  • Residential buildings, including houses and apartment complexes
  • Nonresidential buildings including factories, office buildings, warehouses, and shopping malls
  • Transportation equipment including commercial road and rail vehicles
  • Land improvement costs including land clearing, reclamation, irrigation, and drainage
  • Plant machinery and equipment
  • Other types of construction including infrastructure projects

CGPI is a constituent of New Zealand's broader Business Price Index along with indices related to producer prices, farm prices, salaries and wages, and consumer goods and services prices.

Capital Goods Price Index (CGPI) publication was discontinued in 2015 as a single headline number after being wrapped into the Business Price Index, which is a broader indicator of price changes in the economy. However, CGPI is still broken down in a subsection of the Business Price Index.

The CGPI and Producer Prices

There is no direct corresponding index in the U.S. with New Zealand's Capital Goods Price Index (CGPI). Instead, the Producer Price Index (PPI) captures two similar components for capital goods: materials and components for construction and materials and components for manufacturing.

CGPI publication was discontinued in 2015 as a single headline number after being wrapped into the Business Price Index. However, CGPI is still broken down in a subsection of the Business Price Index.

Producer price indexes measure price changers from the sellers' or producers' point of view. In other words, this index tracks change to the cost of production. Conversely, a consumer price index (CPI) measures cost changes from the viewpoint of the consumer.