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Food Price Index: March 2015
Embargoed until 10:45am  –  15 April 2015
Data quality

Period-specific information
This section contains information about data that has changed since the last release.

General information
This section contains information that does not change between releases.

Period-specific information

Reference period

We collected prices for the food price index (FPI) during the period 10–17 March 2015, with the exception of fresh fruit and vegetable prices. Fresh fruit and vegetable prices were collected each Friday in most urban areas, and each Thursday in remaining urban areas.

Sample size

In a typical month, we collect about 19,000 prices from 560 retail outlets.

Imputation

Due to being unavailable at the time of price collection, we impute, on average, 0.7 percent of prices (not including seasonal fresh fruit and vegetables) in a typical month – by carrying forward the previous month’s price.

General information

Reference population

The reference population of the FPI covers approximately 98 percent of the usually-resident New Zealand population living in permanent dwellings. We make no exclusions based on income source or geographic location.

Expenditure weights

Expenditure weights give the relative importance of the food goods and services in the FPI basket.

We update expenditure weights every three years as part of regular FPI reviews. The weights are derived largely from the 2012/13 Household Economic Survey (HES). We also use information from food manufacturers and distributors, and supermarket scan data from The Nielsen Company.

FPI weights are based on household spending for the year to June 2013 (the ‘weight reference period’) expressed in June 2014 prices (the ‘price reference period’).

The relative importance of the FPI subgroups shows that about $37 of every $100 that households spend on food is spent on grocery food. About $23 is spent on eating out or takeaways, and about $16 is spent on meat, poultry, and fish. Fruit and vegetables account for $14, and the remaining $10 is spent on non-alcoholic beverages, such as packaged coffee, soft drinks, and juices.

More information on the relative importance of FPI subgroups, classes, and selected sections is in table 6 of this release.

Collection methods

We survey prices by visiting retail outlets in 12 urban areas: Whangarei, Auckland, Hamilton, Tauranga, Napier-Hastings, New Plymouth, Palmerston North, Wellington, Nelson, Christchurch, Dunedin, and Invercargill.

Before 1 July 2014, we also collected FPI prices in Rotorua, Wanganui, and Timaru. However, in line with recommendation 7 of the CPI Advisory Committee 2013, we stopped collecting prices in these three regions, so we could divert the cost of collection towards funding CPI-related initiatives such as household living-costs price indexes and seasonally adjusted analytical CPI series. Price change for these regions will be directly represented by Tauranga, Palmerston North, and Christchurch, respectively.

We survey fresh fruit and vegetable prices weekly, and the remaining food prices are generally surveyed between the 8th and 16th day of the month, although sometimes surveying starts and finishes earlier or later.

Sample design

We collect food prices from about 560 outlets in the 12 surveyed urban areas. Of these, about 60 are supermarkets, 30 greengrocers, 20 fish shops, 30 butchers, 60 convenience stores (with about half being service stations and the rest being dairies, grocery stores, and superettes), 110 restaurants (for evening meals), and about 250 other suitable outlets (for breakfast, lunch, and takeaway food).

We collect prices from a sample of supermarkets in each of the 12 FPI pricing regions. This sample is designed to be representative of household purchases in each region. It was last reviewed in 2011. The sample of other stores was last reviewed in 2013 as part of the rolling review of outlets.

See CPI rolling review of retail outlets for more information.

Accuracy of the data

Review of the food price index

We undertake reviews of the FPI every three years, as part of wider reviews of the consumers price index (CPI). The latest review was implemented with the publication of Food Price Index: July 2014. In the review, we reselected the basket of representative food goods and services, calculated new national expenditure weights, and moved to regional expenditure weights.

The previous basket's final price collection period was June 2014. We also collected prices for the updated FPI sample of products in June 2014. An overlapping price collection is necessary when changing a price index, to ensure changes in basket composition (eg basket additions, different outlets) are not reflected as price changes.

See Food price index review: 2014 for more information.

Population weights

From the July 2014 FPI onwards, we weight regional price change using regional expenditure weights for the five broad regions (Auckland, Wellington, rest of North Island, Canterbury, and rest of South Island). Regional expenditure weights use expenditure in each region to weight regional price change. This ensures that price change in regions where households spend more per person on a particular item relative to other regions (eg Auckland, which has 33.37 percent of the population and an FPI regional expenditure weight of 35.52 percent) has more influence on the combined national price change for that item.

For broad regions with multiple pricing centres (rest of North Island and rest of South Island), we use population shares to allocate the regional expenditure weight to the pricing centres.

Previously, we used national expenditure weights in each of the (then) 15 regional pricing centres, weighted by the centre’s population share. The 2013 CPI Advisory Committee recommended this change (recommendation 6), which aligns with international best practice.

We calculated regional expenditure weights as proportions of national expenditure (eg 35.52 percent of food expenditure is in the Auckland region) for each FPI class or section (the lowest published level) using HES regional expenditure. We applied class/section-level proportions to the individual items within that class or section (eg the regional proportions for fruit were applied to national expenditure on each fruit item) to derive regional expenditure on each individual item (eg spending on apples in Auckland).

Regional expenditure was then expressed in June 2014 prices for the respective region (eg apple expenditure in Auckland was expressed in June 2014 apple prices collected in Auckland). We calculated the group-level regional weights by aggregating all food expenditure in each broad region.

We publish the FPI and CPI for five broad regions based on regional council area boundaries. These indexes are available from Infoshare. These regions are Auckland, Wellington, rest of North Island, Canterbury, and rest of South Island. We also publish the FPI for the 12 regional pricing centres.

For the 2014 regional expenditure weights for the five broad regions and 12 regional pricing centres, see table 7 of this release.

Outlet weights

We give outlets appropriate weights to reflect their relative importance in household spending.

Elementary aggregate formulae

We calculate regional elementary aggregates for each of the 12 pricing centres from all prices collected for an item within that region. We use a 'geometric mean of price relatives', or Jevons formula.

We use the Jevons formula to calculate average prices for all food goods and services in the basket, except fresh fruit and fresh vegetables. The Jevons formula assumes that households spend the same amount at each surveyed outlet in each period. This implies that households purchase increased quantities from outlets showing lower-than-average relative price change, and decreased quantities from outlets showing higher-than-average price change. The calculation of fresh fruit and vegetable average prices uses the Dutot formula.

Information about the Food Price Index gives more information on the Jevons and Dutot formulae (see elementary aggregate formulae).

'On special' prices

We include items that are 'on special' in the FPI at the price levels observed at the time of price collection. Quantity specials (eg three loaves of bread for $5.00) are also taken into account (the price per loaf for the special is usually lower than the price of a single loaf). We represent prices that are available only to customers who belong to discount schemes, by collecting these prices at some outlets within a region, but not others.

Consistency with other periods or datasets

Effect of the Christchurch earthquakes on price collection

Following the Christchurch earthquake on 22 February 2011, we used price movements for the rest of New Zealand to calculate price movements in Christchurch for the March 2011 FPI. About half the prices used to calculate the June 2011 FPI had been collected before the 13 June earthquakes; we completed the collection on 20 and 21 June, two working days later than other regions where we collect prices for the FPI.

Index base

The FPI has an index reference period of the June 2006 month (=1000). This is the benchmark we use to compare prices in other periods with (eg if the index number in a later period is 1150, prices have increased by 15.0 percent since the index reference period). Prices for later periods can be compared in the same fashion.

Seasonal adjustment of prices – fresh fruit and vegetables

Until the June 2006 month, we adjusted fresh fruit and vegetable items that exhibited a seasonal pattern to remove the effect of normal seasonal change. From the July 2006 month onwards, the FPI incorporates seasonally unadjusted prices for fresh fruit and vegetables. This change is in line with a recommendation made by the 2004 CPI Revision Advisory Committee.

The ongoing, fully unadjusted FPI is linked at the June 2006 month to the previously published FPI, which is partly seasonally adjusted. Take care when you compare annual movements over this transition period. Annual movements calculated over the annual period encompassing the June 2006 month were based on fully unadjusted index numbers for the latest month, compared with adjusted index numbers for fresh fruit and vegetables for the same month of the previous year.

Reconciling the FPI and food group of the CPI

When comparing the FPI and the food group of the CPI, strictly speaking, the quarterly food group index number is not the average of the relevant three monthly FPI numbers. There are some technical differences between the monthly FPI indexes and quarterly indexes.

See Food prices in the consumers price index and food price index for more information.

Interpreting the data

Seasonal availability of fruit and vegetables

Fruit and vegetable prices are reflected in the FPI when there is enough produce available to estimate representative average prices. For example, we do not include prices for nectarines in the April and May FPI. Similarly, prices for strawberries are not included in the May and June FPI. This is because we cannot collect enough prices from stores during these months. No price change is shown in the FPI for these items during these months. When produce returns to sufficient levels, the prices are again reflected in the FPI. Price movements then reflect the price change from the month that the item was last included to the current month.

Weighted average retail prices of selected food items

Table 3 contains a selection of weighted average retail prices for the current and previous months. We calculated these weighted average retail prices from prices collected in the June 2006 month. Subsequent months' weighted average prices are then calculated by applying price index movements for the relevant items. These are not statistically accurate measures of average transaction price levels, but are reliable indicators of percentage changes in prices.

More information

See information about the Food Price Index.

Statistics in this release have been produced in accordance with the Official Statistics System principles and protocols for producers of Tier 1 statistics for quality. They conform to the Statistics NZ Methodological Standard for Reporting of Data Quality.

Liability

While all care and diligence has been used in processing, analysing, and extracting data and information in this publication, Statistics NZ gives no warranty it is error-free and will not be liable for any loss or damage suffered by the use directly, or indirectly, of the information in this publication.

Timing 

Our information releases are delivered electronically by third parties. Delivery may be delayed by circumstances outside our control. Statistics NZ does not accept responsibility for any such delay. 

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