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Price Index News: January 2012

1. Short stories

Red, ripe, and really versatile: tracking tomato prices in the CPI

Red, ripe, and really versatile: tracking tomato prices in the CPI looks at the price movements of fresh tomatoes and three processed tomato products over the five years from 2006 to 2011. We also look at tomatoes' history in the CPI basket, spending patterns by households, and New Zealand’s overseas trade.

Wool at a glance and in more detail 

In 2011, wool export prices rose to a 21-year high and sheepmeat export prices reached an all-time high. This reminds us of the historical importance of wool and sheep farming to the New Zealand economy – in fact, the number of sheep peaked at 70 million in 1982, before government subsidies were removed.

Wool at a glance gives a pictorial overview of how wool and sheepmeat exports have fared over the past 50 years, while Off the sheep's back: a look at historical wool export prices and volumes takes a more detailed look at how prices and volumes have changed for wool and sheepmeat exports.

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2. Working with others

Economic Measurement Group Workshop 2011

Four representatives from Statistics New Zealand, including Alan Bentley and Frances Krsinich of the Prices business unit, attended the University of New South Wales-run Economic Measurement Group (EMG) workshop. The workshop, now in its 11th year, ran from 30 November to 2 December in Sydney.

As in previous years, the workshop programme focused on price measurement and productivity measurement. The price measurement part of the programme included papers on scanner data and house-price measurement, both of which are directly relevant to research currently being undertaken by Statistics NZ's Prices unit.

Frances and Alan attended a multi-agency meeting the day before the workshop with representatives from the Australian Bureau of Statistics (ABS) and Statistics Netherlands, to discuss using scanner data in consumer price indexes (CPIs). The Dutch have incorporated scanner data into producing their CPI since 2004. The ABS has a research programme in this area – they presented results from their latest research at the EMG workshop. At Statistics NZ, we currently use scanner data to estimate the CPI weights for some CPI items and to inform the selection of product sizes, brands, and varieties. We are actively researching the potential to make greater use of scanner data. Frances presented preliminary results of research on scanner data for consumer electronics.

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3. Virtual papers

Analytical retrospective superlative index based on New Zealand’s CPI

A review of the CPI was implemented when the September 2011 quarter CPI was released in October 2011. The review involved reselecting and reweighting the basket of representative goods and services to ensure it continues to reflect household spending patterns.

On average, 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 paper Analytical retrospective superlative index based on New Zealand’s CPI: 2011 – which draws on and extends work published by Statistics New Zealand in 2007 and 2008 – presents the results of a retrospective superlative index time series calculated between the June 2002 and June 2011 quarters. Expenditure weights, at the June 2002, 2006, 2008, and 2011 quarters, were used to compile the superlative index series.

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.

This paper also presents analysis of how the CPI would have tracked had the index not been reweighted in 2006 and/or 2008.

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4. Nuts and bolts

Newspapers, books, and stationery in the CPI

The newspapers, books, and stationery subgroup of the consumers price index (CPI) had an expenditure weight of 1.22 percent at the June 2011 quarter. The sources and methods used to compile this subgroup are explained in Newspapers, books, and stationery in the CPI.

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5. On the horizon

Summer seasonal goods

Some goods in the CPI basket are purchased mainly 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. We price these goods 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 – no change is shown in other quarters.

However, for some outdoor-living equipment, such as barbecues, prices are also collected in March quarters.

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6. Development updates

Updated weights for Retail Trade Survey deflators

Deflators for the Retail Trade Survey: September 2011 quarter were calculated using updated weights, following the Consumers price index review: 2011. The updated weights are based mainly on household spending patterns (by industry) that were reported in the 2009/10 Household Economic Survey (HES). The previous weights were based on the 2006/07 HES.

The deflators are used to deflate estimates of retail sales in current prices, which allows change in the volume of retail sales to be estimated. This is the first time the deflators have been fully reviewed in the same quarter as a CPI review has been implemented.

Reviewing the business price indexes

Statistics NZ has started a rolling review of the business price indexes – the producers price index (PPI), the farm expenses price index (FEPI), and the capital goods price index. The review has two objectives: to review these indexes and to collect commodity data for use in the national accounts.

In September 2011, the Minister of Statistics approved a commodity data collection survey to collect information on the supply and use of goods and services (commodities) by economically-significant enterprises operating in New Zealand. We will use this information to balance 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.

This commodity information by industry will also be used to establish lower-level weights for the business price indexes, which are used as deflators in producing a chain-volume measure of GDP.

We carried out the last redevelopment of the PPI from 2004 to 2010. The new rolling review is the first to use the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06). As part of the rolling review, the ANZSIC06 industries are being prioritised. We are reviewing industries on six-year cycles for most of them, and on either three-year or 12-year cycles for the remaining industries.

Commodity data collection forms for the first set of industries were sent out in November 2011. Industries currently being reviewed are:

  • primary metal and metal product manufacturing 
  • fabricated metal product manufacturing
  • printing
  • publishing
  • agriculture (including FEPI) 
  • electricity, gas, and water
  • telecommunication services
  • Internet service providers and data processing services
  • computer system design and related services.

 

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

Peter Campion
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 2012

Mon 16 Food Price Index: December 2011
Thu 19 Consumers Price Index: December 2011 quarter


February 2012

Tue  M Labour Cost Index (Salary and Wage Rates): December 2011 quarter 
Tue 14   Food Price Index: January 2012 
Mon 20 M Producers Price Index: December 2011 quarter 
Mon 20 M Capital Goods Price Index: December 2011 quarter


March 2012

Thu 1 M Overseas Trade Indexes (Prices): December 2011 quarter
Thu 1 M Overseas Trade Indexes (Volumes): December 2011 quarter
Tue 13 Food Price Index: February 2012

This issue of Price Index News was released on Wednesday, 11 January 2012.

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