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Price Index News: April 2015

1. Short stories

Fruit and vegetable average retail prices: 2012–14 – table presents fruit and vegetable prices from 2012 to 2014. It provides monthly average retail prices per kilo.

Read the media release: Buying seasonally is financially savvy 

2. Working with others

Recent and upcoming contact with international researchers

Roberto Rigobon of MIT’s Billion Prices Project was in New Zealand recently to discuss research and developments in the area of prices big data. Roberto was brought here by the Reserve Bank and also visited Statistics NZ and talked to our Executive Leadership Team and members of the Prices team. Among other topics, we discussed our research on web-scraped online data with PriceStats, which is affiliated with the Billion Prices Project. PriceStats produces daily inflation indicators for over 20 countries from online data.

In May we will be attending the Ottawa Group meeting of price index experts and the Asian Economic Measurement Group workshop in Tokyo. Prices senior researcher Frances Krsinich will present two papers at the Ottawa Group meeting. The first will be on implementing scanner data for consumer electronics products in our CPI from the September 2014 quarter. The second will be on using the fixed-effects window-splice index for price measurement from online data. Claude Lamboray, from Statistics Luxembourg, will also present a joint paper written with Frances, on modifying the GEKS index when product turnover is high.

Prices team hosts meeting with Australian Bureau of Statistics and Statistics Netherlands

Statistics NZ’s Prices team hosted a three-day meeting in March with their counterparts at the Australian Bureau of Statistics and Statistics Netherlands. Session topics included strategic direction, big data, consumer prices, producer prices, property prices, wage prices, international trade prices, coherence of household consumption measures, dissemination tools, and opportunities to collaborate.

All three agencies plan to make greater use of big data to measure price change, including transaction data supplied by retailers and service providers, and prices obtained from retailer websites. A recent example is from the September 2014 quarter, when we began using retail transaction (ie scanner) data to measure price change for 12 consumer electronics categories using statistical regression models.

Potential benefits of making greater use of big data include quality improvements through greater coverage of transactions and efficiency gains.

The three agencies agreed to work together to make the most of opportunities in the big data space.

3. Virtual papers

Analytical retrospective superlative index based on New Zealand’s CPI

We implemented a review of the CPI when we published the September 2014 quarter CPI in October 2014. The review involved reselecting and reweighting the basket of representative goods and services to ensure it continues to reflect household spending patterns.

The New Zealand CPI is reweighted once every three years. Once each new set of CPI expenditure weights is calculated, it is possible to use the existing and new weights to calculate a ‘superlative’ index on a retrospective basis.

The analytical retrospective superlative index based on the CPI for 2014 – which extends our previous analysis – presents the results of a retrospective superlative index time series calculated between the June 2002 and June 2014 quarters.

See Analytical retrospective superlative index based on New Zealand’s CPI: 2014 for more information.

These analytical time series indicate the effect of commodity substitution on the fixed-weight CPI. Commodity substitution occurs when households react to changes in relative prices by buying fewer goods and services showing higher relative price change, and instead, buying more of those that show lower relative price change.

These time series also reflect changes to the data sources and methods used to compile the CPI expenditure weights. The paper also presents analysis of how the CPI would have tracked under different scenarios, had the index not been reweighted.

4. Nuts and bolts

Producers price index sources and methods report and weight tables

As part of a recent review of the scope and purpose of the producers price index we made several decisions, one of which was to produce updated sources and methods documentation including tables of PPI industry-by-commodity weights. We will publish the updated sources and methods document with the next PPI release in May 2015, and we have published the tables of industry weights with this issue of Price Index News.

See Producers price index weights to view the Excel tables of industry weights.

We will publish the tables of industry-by-commodity weights once we have ensured they meet our confidentiality and quality standards.

See Review of scope and purpose of the producers price index for more information. 

5. On the horizon

Excise duty increase for cigarettes and tobacco

Each year, the government adjusts excise duty on cigarettes and tobacco. The latest update was on 1 January 2015, when excise duty increased 11.09 percent. The increase was based on a 1.09 percent rise in the 'CPI less credit services' index between the September 2013 and September 2014 quarters. The 1 January rise also included a sixth successive 10 percent increase – as set out in the Excise and Excise-equivalent Duties Table (Tobacco Products) Amendment Order 2014.

The consumers price index (CPI) for the March 2015 quarter (released 20 April 2015) will show how the excise increase affected retail prices for cigarettes and tobacco. The price change shown in the March quarter’s CPI should fully reflect the excise increase, depending on the timing of price rises in stores and when Statistics NZ staff collected prices.

The excise duty is now 60.590 cents a cigarette, up from 54.539 cents a cigarette in 2014.

In the December 2014 quarter, excise duty made up about two-thirds ($13.63) of the price of a packet of 25 cigarettes (before GST). A packet of 25 cigarettes cost $23.30 (including GST) in that quarter.

Excise duty increases for cigarettes and tobacco
Date Excise duty (cents per cigarette) Increase (percent)
1 Jan 2009 30.955 5.07
1 Jan 2010 31.443 1.58
29 Apr 2010 34.587 10.00
1 Jan 2011 38.614 11.64
1 Jan 2012 44.210 14.49
1 Jan 2013 49.011 10.86
1 Jan 2014 54.539 11.28
1 Jan 2015 60.590 11.09
Note: On 29 April 2010, excise duty on cigarettes rose 10 percent, while excise on tobacco rose 25.4 percent (tobacco first increased 14 percent and then another 10 percent).


Cigarette and tobacco prices increased 11.9 percent between the December 2013 and December 2014 quarters. This includes the excise duty increase in January 2014.

Education fees in the CPI

In the March quarter CPI of each year, which coincides with the start of the academic year, we show price changes in:

  • tertiary education fees
  • adult and community education fees
  • school fees, donations, and uniform prices.

Business price index information together in one release

We are considering publishing an integrated business price index information release on 19 May. This release would provide a fuller picture of how the prices that business charge and face are changing. The first quarterly business price index information release would include the first release of March quarter producers price index (PPI), capital goods price index (CGPI), and farm expenses price index (FEPI) results, and also draw on labour cost index and overseas trade index information. The PPI, CGPI, and FEPI tables would remain in separate Excel files.

We welcome your feedback on whether an integrated business price index release would better meet your needs.

Contact Chris Pike
Wellington 04 931 4600

Overseas trade price and volume indexes together in one release

We will combine the overseas trade index prices information release and the overseas trade index volumes and values information release into a single information release, on 2 June. The combined release (March 2015 quarter) will bring together related information that was previously presented in two separate releases. The price index tables and the volume index and value tables will remain in separate Excel files.

6. Development updates

Annual update of producers price index weights

We update the producers price index (PPI) industry and commodity weights annually to help maintain the relevance of this index. The weights come from the supply and use tables (SUT) we produce each year as part of the New Zealand System of National Accounts. The updates reflect changes in economy-wide income and expenditure, in particular the mix of products and the mix of industries. We re-weight the industries at the New Zealand Standard Industry Output Categories level 4 and above (there are 118 level 4 industries).

We last introduced weights in the March 2014 quarter PPI, based on the 2010/11 SUT. We used these weights to weight price movements for each quarter from December 2013 to December 2014.

We will introduce new weights in the March 2015 quarter, based on the 2011/12 SUT. We will first use these new weights to weight price movements from the December 2014 quarter to the March 2015 quarter. For further details see the ‘PPI sources and methods report and weight tables’ section above.

We are also updating the lower-level commodity indexes and product samples. This work is part of our review of the business price indexes.

We use the PPIs as deflators in calculating gross domestic product, 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.

The PPIs are also used as an inflation measure and in contract indexation; for example, to reflect changes in prices during the life of a commercial project so all parties have agreed procedures for adjusting originally contracted prices.

Reviewing the business price indexes

We are continuing our rolling review of the business price indexes – the producers price index (PPI), the farm expenses price index (FEPI), and the capital goods price index (CGPI). The review has two objectives: to maintain the relevance of these indexes and to collect commodity data for use in the national accounts.

We survey a sample of economically significant enterprises operating in New Zealand to collect information on their supply and use of goods and services (commodities). We use information from the commodity data collection to balance the production and expenditure estimates of gross domestic product (GDP), within an input-output framework. Doing this requires us to compile tables that detail the supply and use of commodities, by industry.

We also use this commodity information (by industry) to update lower-level weights for the business price indexes. These are used as deflators in producing a chain-volume measure of GDP.

We carried out the previous PPI redevelopment from 2004 to 2010. The current rolling review is the first to use the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06). As part of the review, we prioritised the ANZSIC06 industries and are reviewing them on eight-year cycles for most industries, and on four or 12-year cycles for those remaining.

At present, we are reviewing these industries:

  • fishing
  • meat and meat product manufacturing
  • seafood processing
  • dairy product manufacturing
  • fruit, oil, cereal, and other food product manufacturing
  • beverage product manufacturing
  • telecommunication services
  • Internet service providers and data processing services
  • computer system design and related services
  • building construction
  • heavy and civil engineering construction
  • construction services
  • mining

We have completed reviews and also implemented lower-level PPI commodity weights and updated product samples for the following industries:

Implemented in the March 2013 quarter:

  • printing and publishing

Implemented in the June 2013 quarter:

  • primary metal and metal product manufacturing
  • fabricated metal product manufacturing
  • electricity, gas, and water

Implemented in the March 2014 quarter:

  • farm expenses price index

Implemented in the June 2014 quarter:

  • forestry and logging
  • aquaculture
  • hunting and trapping
  • agriculture, forestry, and fishing support services
  • tobacco product manufacturing
  • petroleum and coal product manufacturing
  • basic chemical and basic polymer manufacturing
  • fertiliser and pesticide manufacturing
  • pharmaceutical, cleaning, and other chemical manufacturing
  • transport equipment manufacturing
  • electronic and electrical equipment manufacturing
  • machinery manufacturing
  • rail, water, air, scenic and sightseeing transport.

Implemented in the September 2014 quarter:

  • agriculture

All industries that are currently being reviewed will have lower-level PPI commodity weights and updated product samples implemented after the March 2015 quarter. We will publish an updated list of these industries in Price Index News.

For more information about the rolling business price index review, please contact:

James Griffin
Wellington 04 931 4600 or 0508 525 525

New CPI initiatives for 2015

We have begun work on two new consumers price index (CPI) initiatives in 2015. These initiatives will help ensure we continue to meet customer needs.

We will produce a suite of eight household living-costs price indexes (HLPIs) for the following household groups by early 2016:

  • beneficiaries
  • income groups (quintiles)
  • Māori
  • superannuitants.

These HLPIs will provide greater insight into the inflation these household groups experience. We have begun development work to:

  • refine the weights used in an initial feasibility study (eg to determine how best to weight insurance payments)
  • confirm, or refine, the precise definitions for each household group
  • develop a suitable price measure for interest payments
  • calculate updated weights based on the 2012/13 Household Economic Survey (HES)
  • incorporate the HLPIs into our production systems.

We will consult with customers shortly to get your views.

We will also publish seasonally adjusted analytical CPI series by the September 2015 quarter, to give our customers a better understanding of inflation without the influence of seasonal price change.

These initiatives came from the recommendations the 2013 CPI advisory committee made.

Decision on 2013 CPI Advisory Committee recommendations provides details about our decisions on the committee’s recommendations.

For more information on the HLPIs and seasonally adjusted CPI series contact:

Alan Bentley
Wellington 04 931 4600 or 0508 525 525

CPI rolling review 2015/16

Between our three-yearly updates of the CPI basket and weights, we undertake rolling reviews. We are currently planning the rolling review for 2015/16. This review will refresh the sample of field outlets and product specifications to ensure they continue to represent where consumers shop and what they buy. We will also consider the mix of price collection modes (physical visits, online price collection, and postal surveys) to ensure prices are collected efficiently and maintain relevance.

For more information on this CPI rolling review for 2015/16 contact:

Katrina Dewbery or Alan Bentley
Wellington 04 931 4600 or 0508 525 525

Labour cost index review in final phase

The labour cost index (LCI) measures changes in wage rates and non-wage labour costs (eg the costs for annual leave and superannuation).

We recently reviewed the LCI weights for salary and wage rates, which we implemented in Labour Cost Index (Salary and Wage Rates): September 2014 quarter. The review updated the weights for salary and wage rate indexes to reflect changes in the industry and occupation structures of the labour market.

The main data sources we used for the new published weights were the 2013 Census, the Business Register of New Zealand businesses, the Labour Cost Survey, the Quarterly Employment Survey, and linked employer-employee data.

See Reweighting the labour cost index (salary and wage rates) for details about the methods we used to compile the new weights.

The final phase of the review would be to reweight the non-wage labour costs component of the index. We are currently consulting LCI customers and stakeholders to better understand the value they obtain from the non-wage component of the LCI.

Price indexes quickly lose relevance if not reviewed. This would undermine the fit-for-purpose quality not only of the indexes, but also of the wider macroeconomic statistics system. This is because we use the LCI as a deflator in calculating gross domestic product. The business community also uses the LCI in wage negotiations and contract indexation clauses. Government agencies such as the Reserve Bank and The Treasury use the LCI to monitor and forecast wage inflation.

The LCI review is based on the existing industry and occupation groups – the New Zealand Standard Industrial Output Categories and the Australian and New Zealand Standard Classification of Occupations, respectively.

For further information about the review, contact:

Ludeth Mariposa
Wellington 04 931 4600

7. Release dates

Price index release calendar for the next three months

April 2015

Wed  15 Apr             Food Price Index: March 2015
Mon  20 Apr     M    Consumers Price Index: March 2015 quarter

May 2015

Wed  6 May      M    Labour Market Statistics: March 2015 quarter
Wed 13 May             Food Price Index: April 2015
Tue  19 May      M    Capital Goods Price Index: March 2015 quarter
Tue  19 May      M    Producers Price Index: March 2015 quarter
Tue  19 May             Farm Expenses Price Index: March 2015 quarter – tables

June 2015

Tue   2 Jun        M    Overseas Trade Indexes (Prices and Volumes): March 2015 quarter (provisional)
Fri  12 Jun                Food Price Index: May 2015

M = Media conference

This issue of Price Index News was released on Thursday, 16 April 2015.

ISSN 2350-3092

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