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Consumers Price Index: September 2017 quarter
Embargoed until 10:45am  –  17 October 2017
Commentary

Food and housing prices continue to rise

The CPI rose 0.5 percent in the September 2017 quarter, following a flat June 2017 quarter. Continuing price rises for housing and household utilities, and food were partly offset by falls in transport, and communication. After adjusting for seasonal effects, prices rose 0.3 percent.

Housing and household utilities prices rose 1.0 percent in the September 2017 quarter.

  • Local authority rates rose 3.5 percent, compared with a 3.0 percent rise in the September 2016 quarter. Local authorities set their rates annually, and these mainly show in the September quarter's CPI.
  • Rentals for housing rose 0.6 percent – up 1.0 percent in Wellington, up 0.5 percent in Auckland, and down 0.2 percent in Canterbury.
  • Purchase of new housing (excluding land) rose 1.1 percent – up 1.4 percent in Wellington, 1.0 percent in Auckland, and 0.4 percent in Canterbury.
Other housing-related costs also contributed this quarter, with property maintenance services up 1.2 percent, dwelling insurance up 6.1 percent, and real estate services up 1.7 percent.

Food prices were up 1.1 percent in the September 2017 quarter. Most of the quarterly rise was attributable to seasonally higher tomato prices (up 34 percent).

Transport prices fell 1.1 percent in the latest quarter, making the largest downward contribution.

  • Petrol prices fell 1.7 percent – after falls in June and July, prices steadily rose over August and September, but remained lower than in the June quarter.
  • International air fares fell 5.5 percent – with flights to Europe returning to a similar level as before the Lions rugby tour.
  • Vehicle relicensing fees fell 8.0 percent.
Petrol prices continued to show regional divergence, with quarterly falls of 1.5 percent in Auckland, 2.5 percent in the South Island, and 3.0 percent Wellington. These followed similar falls of 1.7 percent, 2.9 percent, and 2.9 percent, respectively, in the June quarter.

Communication prices fell 1.3 percent, reflecting better-value telecommunication services (down 1.5 percent).

Tradable prices grow slightly in September quarter

Tradables rose 0.2 percent in the September 2017 quarter, following a 0.2 percent fall in the June 2017 quarter. Higher prices for vegetables were mostly offset by lower petrol, international airfare, and fruit prices.

Non-tradables rose 0.7 percent in the latest quarter, with higher prices for local authority rates, rents, and new housing. Better-value telecommunication services and cheaper vehicle-relicensing fees partly offset the increase.

The following graph shows the index points contribution to the CPI of items that rose or fell in price for each quarter (see also table 13, available from the 'Downloads' box).

Graph, Consumers price index, percentage points contribution, September 2017.

Annual inflation rate 1.9 percent

In the year to the September 2017 quarter, the CPI increased 1.9 percent, following a 1.7 percent increase in the year to June 2017.

Housing and household utilities were the main upward contributor (up 3.0 percent), influenced by:

  • newly built houses, excluding land (up 5.4 percent), with increases of 6.8 percent in Auckland, 3.2 percent in Wellington, and 2.6 percent in Canterbury.
  • actual rentals for housing (up 2.2 percent), with increases of 2.7 percent in Auckland and 3.7 percent in Wellington, partly offset by a 1.9 percent decrease in Canterbury.
  • local authority rates (up 3.7 percent). This value is slightly higher than the quarterly movement because a small proportion of rates came through in the December 2016 quarter. This year, 98 percent of rates are accounted for in the September quarter.

Other housing-related prices also increased for the year, with property maintenance services up 3.4 percent, real estate services up 8.1 percent, and dwelling insurance up 12 percent.

Food prices increased 2.8 percent, with vegetables up 9.0 percent and fruit up 2.2 percent.

Alcoholic beverages and tobacco prices increased 4.5 percent, primarily reflecting the annual increase in tobacco tax in the March quarter.

Transport prices increased 2.0 percent, influenced by higher prices for petrol (up 4.5 percent).

Communication group prices decreased 5.3 percent, with better-value telecommunications services (down 4.5 percent), and equipment (down 22 percent). Price decreases for these items mostly represent continual improvements in quality and capability.

Tradables increased 1.0 percent in the year to September 2017. Higher prices for petrol; vegetables; and milk, cheese, and eggs, made the main upwards contributions. These were partly offset by decreases for audio-visual equipment, package holidays, and computing equipment.

Non-tradables increased 2.6 percent in the year to September 2017. Prices for cigarettes and tobacco made the most-significant upwards contribution, followed by purchase of new housing (excluding land), rentals for housing, and local authority rates. These increases were partly offset by decreases for telecommunications services and vehicle-relicensing fees.

Underlying price change matches overall increase

The trimmed-mean measures – which exclude extreme price rises and falls – all showed a quarterly change of 0.5 percent. This indicates the ‘underlying’ price change (excluding extreme price rises and falls) was consistent overall for the quarter.

Underlying price changes ranged from 1.9 percent to 2.1 percent on an annual basis, indicating higher underlying price change.

Table 3.03 of the attached Excel tables shows selected groupings in the year to the September 2017 quarter.

  • CPI excluding housing and household utilities group increased 1.6 percent.
  • CPI excluding alcoholic beverages and tobacco group increased 1.7 percent.
  • CPI excluding transport group increased 1.9 percent.

The 'non-tradables less central and local government charges and cigarettes and tobacco subgroup' measure, which aims to reflect price change excluding direct government influence, rose 0.8 percent for the quarter, and 2.2 percent for the September 2017 year. Central and local government charges rose 2.1 percent in the year to the September 2017 quarter.

For more detailed data on the CPI see the Excel tables in the ‘Downloads’ box.

Updated CPI for the December 2017 quarter

The release of the December 2017 quarter CPI will be a week later than usual, as we are implementing a review of the index. CPI reviews happen every three years and help ensure the index remains relevant.

Consumers Price Index: December 2017 quarter will be published on 25 January 2018. The reviewed index will incorporate:

  • an updated basket of goods and services
  • an updated expenditure weighting pattern.

We will release a paper on the CPI review on 12 January 2018. The paper will include:

  • the new expenditure weights, down to the third (class) level of the expenditure classification
  • details of changes made to the basket of goods and services.

The paper will be available on our website and will be sent to all CPI information release subscribers.

The reweighted food price index (FPI) for October will also be released later than usual, on 20 November 2017. Subsequent CPI and FPI releases will be published at the usual times.

Please see our online release calendar for information on release dates.

For further information about the CPI review, please contact:

Bryan Downes or Fiona Smillie
0508 525 525 toll-free
Email cpireview@stats.govt.nz with ‘CPI review 2017’ in the subject line.

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