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Structure of the producers price index

This chapter describes the industry and commodity classifications that we use in the producers price index (PPI), and how these are structured to compile the index.

Topics covered in this chapter are:

Industry classifications

The PPI uses the industrial classification New Zealand Standard Industrial Output Categories (NZSIOC). NZSIOC is based on Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06), and was introduced to obtain standardisation across all aggregated economic outputs. NZSIOC is hierarchal with four levels, with the most detailed level (level 4) having 118 distinct industry groupings.

The price index for each industry within the PPI is calculated at level 4. For confidentiality reasons, the most detailed level of data we publish in our information releases is level 3.

See New Zealand Standard Industrial Output Categories (NZSIOC) 

See Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06)

Commodity classifications

The PPI uses two commodity classifications: National Accounts 2006 Commodity Classification (NA06CC) and Central Product Classification (CPC).

The NA06CC classification is a Statistics NZ classification developed by our National Accounts team. We use this classification for the ‘NA06CC commodity’ indexes in the PPI.

The CPC classification is an international classification that we use to classify our ‘representative commodity’ indexes. See ‘Building blocks’ below for information on how these commodity indexes are linked together.

Building block structure

The hierarchical structure we use to compile the PPI indexes is organised into levels and building blocks. Each building block consists of an index and its input prices/indexes and weights. A building block can feed into the level above.

The benefits of using a building block structure include increased industry and commodity detail, analytical capability, and the ability to undertake periodic reweighting and updating of blocks in the structure on a rolling basis.

We introduced a building block structure for the PPI indexes during a 1996–98 review. When we implemented the ANZSIC06 industrial classification we introduced an additional commodity level, the NA06CC, to the structure.

The most detailed price indexes are called representative commodities – there are over 700 of these. The price indexes for one or more representative commodities are combined into a higher-level price index at the NA06CC commodity level – there are about 300 of these. Generally, a representative commodity contributes only to one NA06CC commodity.

Every NA06CC commodity then feeds into the lowest breakdown of industry level indexes – NZSIOC level 4. These level 4 indexes then aggregate to published industry level indexes – NZSIOC level 3, then level 2, then level 1, and finally aggregating to the all industries PPI.

See Figure 1 for an example of the building block structure for PPI inputs. This diagram is not the complete view of the PPI structure – it is an example to show how the building block structure works for both the input and output indexes. The level descriptions on the left side of the diagram include the number of indexes at each NZSIOC level, and the approximate number of commodities we compile at each level.

Figure 1
Example: PPI inputs index

diagram, PPI inputs index

We publish industry indexes at NZSIOC levels 0, 1, 2, 3, and selected level 4 industries. We also publish some commodity indexes, and mention unpublished indexes in terms of their contribution to the published indexes in the PPI information release.

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