Printing Machinery Prices Remain Stable

Inflation is back throughout the economy, while deflation is gone for at least several years.

Printing equipment prices have stabilized, and a sustained—but very weak—rising price trend is expected by mid-year. Equipment prices will gain less than 1% this year, and then more than 1% in 2005. The turnabout in price trends is due to U.S. GDP growth more than doubling to a 4%+ annual pace, along with parallel jumps in the level of economic activity in most other key countries for print products.

Spot pressure on print capacity is expected early in 2004, but it won't be widespread enough to permit equipment suppliers to get better margins until late in the year. However, input costs for machinery manufacturers—especially steel, plastics, rubber, and nonferrous metals—have been rising sharply for several months and will soon creep into equipment pricing.

Prices for digital equipment continue to decline 2% to 3% a year, while inflation for largely mechanical equipment remains in the 0% to 0.5% range, about half of the pace for all capital equipment. While little change in this trend is expected this year for either type of equipment, tighter supply conditions should be expected for 2005-2006, with inflation 0.5 to 1.0 percentage points higher as prices rise for other capital equipment.