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Price Index News: April 2009

1. Short stories

The rise and fall of traditional home baking

Family cake tins were once filled to the brim with home-baked biscuits, cakes and loaves. According to the American Home Baking Association, however, home baking began to decline in the 1960s as lifestyles became busier. The rise and fall of traditional home baking looks at how the home baking ingredients of flour, sugar, eggs and butter have declined in relative importance in the consumers price index basket.

Shoppers prepared to pay more for premium food products

Shoppers face many choices when selecting grocery food items to refill pantries, refrigerators and freezers. For items on shopping lists, personal preferences, budget constraints and the number of people in the household influence shoppers’ choices (including which brand, variety and size).

For many types of grocery food, there are basic or standard products at prices that might be attractive to budget-conscious shoppers, and there are premium products that some shoppers are prepared to pay more for. Shoppers prepared to pay more for premium food products compares the prices of a number of standard and premium food products tracked for the food price index.

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2. Working with others

Ottawa Group meeting in May

The eleventh meeting of the Ottawa Group, an international research forum for consumer price index (CPI) specialists is being held in May in Neuchatel, Switzerland. The group's meetings provide a forum for specialists and practitioners (who work for, or are advisors to, national statistical agencies or international organisations) to exchange their experiences and thoughts on key topics relating to the measurement of price change.

Topics and sessions on the agenda include:

  • price statistics and the housing market
  • weighting quality, frequency of update, reference period, and price updating
  • price measurement of 'hard to follow' products
  • new developments in calculation methods – elementary aggregates and retrospective approximations
  • core inflation – from calculation to interpretation
  • globalisation and specialisation.

Statistics New Zealand is preparing three papers for the conference. One, which outlines core inflation measures produced in New Zealand, will be presented at the meeting. The other two will be available as room documents. The first of these, published in November 2008, is an analysis of the retrospective superlative CPI calculated between the June 2002 quarter and the June 2008 quarter. The second investigates the impact of various weighting and price updating options for the basket of goods and services in the New Zealand CPI.

Statistics NZ will host the twelfth meeting in Wellington in May 2011 and is on the steering committee for the eleventh meeting.

Purchasing power parity meeting in April

The next purchasing power parity (PPP) meeting for non-European countries will be held in Washington in late April 2009. The main topics of the meeting will be the organisation, timetable and interim results of the first surveys of the current 2008 round, the organisation of the 2011 round, and data collection techniques. There will also be a special session in conjunction with the US Bureau of Economic Analysis on the treatment of non-market services (education and health) in the PPP programme, and the use of output measures to improve the quality of PPPs in this area.

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3. Virtual papers

Economic measurement group workshop paper

The Centre for Applied Economic Research at the University of New South Wales hosted the eighth annual international Economic Measurement Group workshop in December 2008. The three themes were price measurement, productivity measurement, and the measurement of services. Statistics NZ presented papers at the services and price measurement sessions. The Price Measurement Paper outlined the role and measurement of the producers price index (PPI) in New Zealand. The paper looked at the uses, benefits and limitations of the PPI, as well as how Statistics NZ's methods compare with international practices in producers price measurement.

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4. Nuts and bolts

Treatment of exchange rates in the overseas trade and producers price indexes

A majority of the goods and services that New Zealand exports and imports are transacted in foreign currencies, so changes in exchange rates can have a significant impact on the overseas trade indexes. Treatment of exchange rates in the overseas trade and producers price indexes outlines the methods and data sources used to convert foreign currency values and prices to New Zealand dollars.

Index time series available online

A wide range of price index time series can be accessed free of charge from the online Infoshare database, available at http://www.stats.govt.nz/infoshare.

To access price index time series:

  • click on 'Browse'
  • choose a subject category
  • choose a price index.

The capital goods price index, consumers price index and producers price index are all under the 'Economic indicators' category.

The labour cost index is under 'Work, income and spending', the overseas trade indexes are under 'Imports and exports', and the retail trade deflators are under 'Industry sectors'.

The time series can be downloaded in Excel or comma delimited format, where percentage movements can be calculated using the following formula:

((Index number for later period minus index number for earlier period) divided by index number for earlier period) multiplied by 100.

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5. On the horizon

Excise duty increase for cigarettes and tobacco

The excise duty on cigarettes and tobacco increased by 5.07 percent on 1 January 2009. The impact on retail prices will show in the March 2009 quarter consumers price index (CPI), depending on the timing of price increases in stores and the timing of price collection by Statistics NZ.

Education fees

The CPI shows changes in tertiary education fees and changes in school fees, donations, and uniform prices in the March quarter of each year.

Trimmed means and weighted percentiles added to CPI information release tables

With the release of the March 2009 quarter CPI, the trimmed means and weighted percentiles, which previously were attached as supplementary tables, will appear in the main information release tables. The trimmed mean series will appear in table 11 and the weighted percentile series will appear in table 12.

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6. Development updates

Labour cost index review

Statistics NZ is undertaking a labour cost index (LCI) review project. The LCI measures changes in wage rates and non-wage labour costs.

The reweight will ensure the LCI continues to reflect the current labour market. The 2006 Census is a key data source for the reweight, as was the 2001 Census for the previous reweight in 2002. Other important data sources being used include Statistics NZ's Business Frame (a register of New Zealand businesses), the Labour Cost Survey and the Quarterly Employment Survey (QES).

The new expenditure weights are being assigned at the sector of ownership (based on whether the organisation is owned privately, by central government or local government), by industry group and occupation level. The expenditure weights will reflect both the number of jobs filled by paid employees and the pay rates for those jobs.

The reweighted salary and wage rates indexes for the September 2008 quarter were released in November 2008 (see the 'nuts and bolts' section of the January 2009 newsletter for more information). The reweighted indexes of non-wage labour costs for the June 2009 quarter will be released in October 2009. These reweights are based on the existing LCI sample and the existing industry and occupation groups.

Following the reweight using the existing classifications, more up-to-date industry (Australian and New Zealand Standard Industrial Classification 2006), and occupation (Australian and New Zealand Standard Classification of Occupations) classifications will be implemented in the LCI. The new industry and occupation classifications have a different structure from existing classifications used in the LCI. The first LCI results using the new classifications are expected to be included in the September 2009 quarter salary and wage rates information release.

Currently the LCI sample is being refreshed to ensure it adequately represents the new classification structures.

If you would like to be kept informed of progress on the LCI review, please contact:

Claudia Schroeder
Wellington 04 931 4600
Email: info@stats.govt.nz

Update on the business price index redevelopment

This note provides an update on progress with the redevelopment of the producers price index (PPI), farm expenses price index (FEPI) and capital goods price index (CGPI).

Redevelopment is currently under way on the following indexes:

  • CGPI
  • FEPI
  • rubber, plastics and other chemical manufacturing
  • legal and accounting services
  • water transport
  • wholesale trade
  • scientific research and technical services
  • health and community services (input index only)
  • cultural and recreational services
  • education (input index only)
  • personal and other services
  • other manufacturing.

The following indexes are provisionally complete and will be implemented in the PPI once they have been thoroughly tested:

  • horticulture and fruit growing
  • livestock and cropping farming
  • dairy cattle farming
  • other farming
  • heavy and civil engineering
  • construction trade services
  • retail trade
  • telecommunication services
  • mining
  • other transport and storage services
  • residential property operators
  • commercial property operators and developers
  • real estate agents
  • other property services
  • vehicle and equipment hire.

The following indexes have been tested and implemented:

  • services to agriculture, hunting and trapping
  • forestry and logging
  • meat and meat product manufacturing
  • dairy product manufacturing
  • other food manufacturing
  • tobacco, beverage and malt manufacturing
  • wood product manufacturing
  • paper and paper product manufacturing
  • printing, publishing and recorded media
  • basic metal manufacturing
  • sheet and fabricated metal product manufacturing
  • transport equipment manufacturing
  • machinery and equipment manufacturing
  • electricity generation and supply
  • gas supply
  • residential construction
  • non-residential construction
  • accommodation, cafes and restaurants
  • road transport
  • air transport
  • rail transport
  • postal and courier services
  • computer services
  • other business services
  • textile and apparel manufacturing
  • finance
  • insurance
  • services to finance and insurance
  • fishing
  • ownership of owner-occupied dwellings
  • petroleum, coal and basic chemical manufacturing
  • non-metallic mineral product manufacturing.

A sources and methods publication will be published when the redevelopment is complete.

Current redevelopment provides further information about the project and progress to date.

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7. Making contact

In future issues of Price Index News, we will use this section to let you know about:

  • plans to consult users of price index statistics
  • the availability of consultation papers
  • how users of price index statistics can participate in the consultation process
  • decisions made after users have been consulted.

If you would like to discuss any aspect of price index statistics, we would like to hear from you. Contact names are at the end of the commentary of each Hot Off The Press information release. In addition, you can contact:

  • Chris Pike (Acting manager – Prices)
  • Litia Tapu (Project manager – Business, Labour and Overseas Trade Price Index outputs)
  • Patricia Jennings (Project manager – Business Price Index development)
  • Daniel Griffiths (Project manager – Consumers Price Index outputs)
  • Ludeth Mariposa (Acting project manager – Consumers Price Index/Labour Cost Index development).

Wellington 04 931 4600
Email: info@stats.govt.nz

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8. Release dates

Price index release calendar for the next three months

M = Media conference

April 2009

Fri 17 M Consumers Price Index: March 2009 quarter
Food Price Index: March 2009

May 2009

Mon 4 M Labour Cost Index (Salary and Wage Rates): March 2009 quarter
Tue 12 Food Price Index: April 2009
Mon 18 M Producers Price Index: March 2009 quarter
Capital Goods Price Index: March 2009 quarter

June 2009

Wed 10 M Overseas Trade Indexes (Prices): March 2009 quarter (provisional)
Overseas Trade Indexes (Volumes): March 2009 quarter (provisional)
Fri 12 Food Price Index: May 2009
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