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About the producers price index

How the PPI is used

The primary purpose of the PPI is for use by Statistics NZ as deflators in calculating gross domestic product (GDP), which is New Zealand’s official measure of economic growth. These deflators remove the effect of price change so we can measure change in the volume of goods and services produced in the economy. For this reason, the current PPI aligns closely with the System of National Accounts 2008 (SNA08).

Other uses for the PPI include short-term indicators of producer inflationary trends, and in contract indexation clauses (also known as contract escalation). Recognising this usage, we published Contract Indexation: A Guide for Businesses.

The different ways that people use the PPI can result in differing requirements for the way it is compiled. We decided on the index types, weighting schemes, pricing levels, transactions, and range of expenditure based on the PPI’s primary purpose as a deflator in calculating GDP.

Accessing PPI data

We release the PPI quarterly as part of an integrated Business Price Indexes release, in the third week of the second month after the end of the reference quarter. For example, Business Price Indexes: March 2015 quarter was released on 19 May 2015.

See Business Price Indexes – information releases 

You can access longer time series for all our PPI indexes (including discontinued series) on Infoshare, which provides online access to a wide range of time series data.

Go to Infoshare and access the PPI under the ‘Economic indicators’ category.

About price indexes

A price index measures price changes for a fixed set of goods and services. For any set of goods and services, a representative subset (a ‘basket’) is selected for pricing. This subset is a sample of the whole population of prices, and is intended to represent price change in the whole set of goods and services being studied.

A price index measures the percentage change in prices between time periods, not the actual level of prices. This means that the significance of a series of index numbers lies in their relative values. A single index number, when considered alone, provides no informational value. For an index to provide information on price change, at least two index numbers from the same time series are required to derive the percentage change in price. The index numbers must relate to the same index reference period (the reference point of 1000) to give a meaningful result.

A price index is a statistical measure that summarises the price change of the goods and services represented by the items in its basket. The basket itself is a statistical estimate, representing the experience of households or businesses at a particular period. The results have certain properties such as variability, sample and non-sample error, and defined scope or boundaries. These can all result in the price change identified varying from the true or ideal measure sought by customers. The price indexes we produce are therefore estimates of the actual change in the level of prices. Over time they will fluctuate above and/or below the true price change.

The accuracy of price indexes varies depending on the particular characteristics of each index. The nature of the commodities being measured is a factor affecting accuracy as some items are easier to price on a consistent basis than others. Services are known to be particularly problematic. Both the level and quality of output are often difficult to accurately identify and price. Furthermore, the level of disaggregation may affect quality, with indexes at a lower level generally having more variability than indexes at a more aggregated level where volatility from sampling is smoothed out.

In general, an index’s accuracy depends on the nature of the commodity group or industry being measured, and the level within the hierarchy from which it is drawn. In most instances, customers make a trade-off between the level of detail contained in the index, and its statistical accuracy. Customers should be aware of this trade-off when using our indexes.

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