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Price Index News: January 2010

1. Short stories

Seasonal price fluctuations for fresh fruit and vegetables

About $14 of every $100 spent by households on food is consumed on fruit and vegetables. Seasonal price fluctuations for fresh fruit and vegetables examines fruit and vegetables in the food price index basket to illustrate seasonal variation in prices.  

Christmas dinner cost a dollar or two less

It appears that the last Christmas dinner cost a dollar or two less than the previous year, but a few dollars more than two years earlier. To mark the festive season, Statistics New Zealand estimated the cost of traditional and barbecue Christmas dinners for a family of two adults and two children. The cost of each meal was estimated using prices collected for the November 2009 food price index, and costs were compared with those for November 2008, 2007, and 1999. 

In 2009, a traditional Christmas dinner cost about $48.80, compared with about $50.50 in the previous year, a fall of about $1.80 (3.5 percent). The cost of a kiwi barbecue Christmas dinner fell by about 90 cents (1.9 percent), to about $48.80 from around $49.80 in 2008. See Christmas dinner should cost us a dollar or two less this year for more information on the changing costs of the two types of Christmas dinner.

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2. Working with others

Meeting with the Australian Bureau of Statistics

Seven staff from the Australian Bureau of Statistics (ABS) travelled from Canberra and Sydney to Wellington in November last year for a three-day bilateral meeting with their Statistics NZ counterparts in the Prices, Macro-Economic Statistics Development, and National Accounts business units.

The bilateral discussion, the first in three years, was an opportunity to reflect on latest developments, such as the recently implemented labour cost index review; and to discuss challenging price measurement issues, progress on current projects, and possible future initiatives. Staff from the two agencies worked together on a number of projects leading up to the bilateral meeting, and reported back on progress during the three days. The meeting helped to foster ongoing contact and collaboration between the two prices units. Interestingly, Statistics NZ and the ABS will concurrently implement upcoming reviews of their respective consumers price indexes (CPIs), for the September 2011 quarter. Dallas Welch, deputy government statistician of the Macro-Economic and Environment Statistics Group at Statistics NZ, is on the advisory group for the ABS CPI review. 

Employment agreements seminars

Victoria University's Industrial Relations Centre held Employment Agreements: Bargaining Trends and Employment Law Update seminars in November 2009. The seminar was split into two parts. The first was bargaining trends, presented by Stephen Blumenfeld. Stephen’s presentation covered changes in collective bargaining trends for a variety of different variables including: the structure of bargaining agreements, wages, working time, leave, and other conditions such as superannuation, and redundancy notice and compensation. The Industrial Relations Centre acquires this information by surveying New Zealand employers and trade unions for copies of collective employment agreements. The Centre's database of agreements is also used to produce measures of wage change, which complement the labour cost index and quarterly employment survey measures produced by Statistics New Zealand.

The second part of the seminar was an employment law update presented by Peter Kiely. Peter’s presentation covered recent high-profile Employment Court cases, including the facts of each case, different perspectives, and the outcomes.
 
More information on the Industrial Relation Centre's work can be found here.

Economic Measurement Group 2009 – presentation on the use of hedonics at Statistics New Zealand

In December, three staff from Statistics NZ's Prices unit attended the Economic Measurement Group 2009 workshop in Sydney. The workshop was run by the Centre for Applied Economic Research of the University of New South Wales and involved three days of presentations and discussions on economic measurement issues, in particular on the areas of price measurement, productivity measurement, and the measurement of financial services.

Frances Krsinich, a senior research statistician from Prices, presented a paper on the Use of hedonic methods at Statistics New Zealand. Hedonics is the use of regression modelling to measure price change, where price-determining characteristics are included in the regression model as explanatory variables, so that the price change can be determined independent of the effect of these characteristics. For price measurement from samples with changing characteristics over time, this technique is being used to an increasing extent internationally. Statistics NZ uses a hedonic estimation method to measure the price change of used cars in the consumers price index, and has recently used hedonic methods in some benchmarking exercises to assess the quality of non-hedonic estimation methods for the measurement of both housing rentals and house prices.

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3. Virtual papers

Stocktake of house price measures in New Zealand

Statistics New Zealand recently undertook a Review of Housing Statistics. One of the recommendations of this review is that "Statistics NZ, with input from Quotable Value/PropertyIQ, the Treasury, the Reserve Bank, the Department of Building and Housing, and Housing New Zealand Corporation, should lead an investigation into different methodologies and data sources for quality adjusted house and land price indexes with a view to confirming or upgrading existing measures, or developing new measures."

As a first step towards this, staff from the Prices unit at Statistics New Zealand recently compiled a stocktake of existing house price measures in New Zealand.  

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4. On the horizon

Increases within two CPI classes: other private transport services and petrol

The consumers price index (CPI) other private transport services class contains such services as vehicle relicensing, driver licensing, warrants of fitness, road user charges, parking services, and driving tuition.

Road user charges for a small private motor car, administered by the NZ Transport Agency, increased by 10.0 percent (or $3.61 per 1,000 km) on 1 October 2009. Transaction fees associated with the purchase of road user charges remained unchanged and will moderate this increase. The fuel excise duty on petrol also increased by $0.03 per litre on 1 October. These price increases will be shown in the December 2009 quarter CPI.

Summer seasonal goods

Some goods in the CPI basket are purchased predominantly during summer. The CPI summer seasonal survey of these goods is conducted once a year, in the December quarter. Summer seasonal goods in the basket include summer clothing, footwear, and sports equipment. These goods are priced only in December quarters because they have a limited supply and demand in other quarters. Changes in summer seasonal prices are shown fully in December quarters and show no change in other quarters. For some outdoor living equipment goods, such as barbecues, prices are collected in December and March quarters.

Heat Smart initiative

On 1 July 2009, the government introduced higher levels of funding to the 'Warm up New Zealand: Heat Smart' initiative (which replaced the previous home insulation programmes), administered by the Energy Efficiency and Conservation Authority (EECA). Homeowners with houses built before 2000 are eligible for funding to help insulate their houses, and install clean and efficient heating. For more on the Heat Smart initiative, see the EECA website and the EECA Energywise website.

The estimated impact of price subsidies available to households under the Heat Smart initiative was first incorporated in the CPI in the September 2009 quarter, within the property maintenance services class. Further reported uptake of the subsidies by households during the September, October, and November 2009 months will be reflected in the December 2009 quarter CPI.

Official Statistics Forum 2010

Registrations open – click here to register

An early bird price of $375 is available until 26 February 2010 – this includes both days of the forum plus a networking function.

The Official Statistics Forum 2010 will be held in Wellington across two days, 24–25 March 2010. The theme of the forum is realising the value of official statistics. The event will feature a mix of keynotes speakers, panel discussions, and concurrent sessions.

Every few years the producers and users of official statistics get together to review how well the statistical system in New Zealand is working, hear about innovations in the uses and application of official statistics, and seek to agree what an even better future Official Statistics System (OSS) should look like. The gathering is convened by Statistics NZ, the leaders of the OSS.

This event is sponsored by government agencies represented in the OSS, many of whom will present papers.

Any questions can be addressed to oss@stats.govt.nz, with Official Statistics Forum in the subject line. 

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5. Development updates

Update on the business price index redevelopment

The redevelopment of the producers price index (PPI) and other business price indexes is nearly complete. The remaining indexes are ready for testing and will be progressively implemented in the PPI for the December 2009 quarter (to be released in February 2010), and for the March 2010 quarter (to be released in May 2010). An update on the project can be found on the Business Price Index Redevelopment Project web page.

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 by 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. The reweighted indexes of non-wage labour costs for the June 2009 quarter were published on 22 October 2009. These reweights were 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 (ANZSIC06)), and occupation (Australian and New Zealand Standard Classification of Occupations (ANZSCO)) classifications have been implemented in the LCI. These new industry and occupation classifications have different structures from the existing classifications used in the LCI. First LCI results using the new classifications were included in the September 2009 quarter salary and wage rates information release, published on 3 November 2009.

The LCI has been re-expressed on a base of the June 2009 quarter (=1000). The sample of surveyed job descriptions has been refreshed to better reflect the structure of the ANZSIC06 classification. The ANZSIC06-based industry and ANZSCO-based occupation indexes have not been backcast before the June 2009 quarter. However, the LCI (salary and wage rates) series on the old industry and occupation classifications will continue to be published until the June 2010 quarter, providing a year-long overlap.

The ANZSIC06-based industry and ANZSCO-based occupation indexes have new series references. The series references for the occupation indexes changed from LCIQ.SF to LCIQ.SH (eg LCIQ.SF51Z9 to LCIQ.SH51Z9). For industries, the series references changed from LCIQ.SE to LCIQ.SG (eg LCIQ.SE53Z9 to LCIQ.SG53Z9). The indexes of all industries/occupations combined have been linked to the existing series and re-expressed on a base of the June 2009 quarter (=1000). For more information see the technical notes section of the September 2009 quarter salary and wage rates information release.

Recent work on the review has focused on the reweight of the non-wage labour costs under ANZSIC06 which will be published in October 2010.


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 

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6. Making contact

Contract indexation

Parties that engage in commercial contracts use a range of price indexes produced by Statistics NZ in their indexation clauses (also known as contract escalation clauses). An indexation clause provides both parties to a contract with an agreed procedure for adjusting an originally contracted price, to reflect changes in costs or prices during the life of the contract. Contract indexation: A Guide for Businesses, which was linked in the October 2009 issue of Price Index News, is now available here in PDF form. The paper provides information on the price indexes produced by Statistics NZ and issues relating to their use in indexation clauses. The guide also outlines some points to consider when preparing an indexation clause, and includes an example of the mechanics of a simple indexation formula. With the recent introduction of a new industry classification in the labour cost index and the adoption of a new index reference period (the June 2009 quarter (=1000)), parties to long-term contracts may find it useful to refer to point 12 (discontinuities) under the 'Things to consider' section. Point 12 outlines the steps required to select an appropriate replacement series; decide when to link in the replacement series; and adjust the index number relating to the contract base date, to preserve the percentage movements of the original series. If you require assistance, please contact:

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

 

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 in 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)
  • Vannessa Turner (Acting 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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7. Release dates

Price index release calendar for the next three months

M = Media conference

January 2010

Wed 20 M Consumers Price Index: December 2009 quarter
Food Price Index: December 2009

February 2010

Tue 2 M Labour Cost Index (Salary and Wage Rates): December 2009 quarter
Thu 11 Food Price Index: January 2010
Tue 16 M Producers Price Index: December 2009 quarter
Capital Goods Price Index: December 2009 quarter

March 2010

Wed 10 M Overseas Trade Indexes (Prices): December 2009 quarter (provisional)
Overseas Trade Indexes (Volumes): December 2009 quarter (provisional)
Thu 11 Food Price Index: February 2010
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