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100 years of the CPI

This article gives a brief overview of how prices faced by New Zealand households have changed over the past 100 years, and gives context to some major price changes in our history.

Since 1990, the Reserve Bank has set official cash interest rates, aimed at keeping inflation within a set range, but it hasn’t always been this way.

The consumers price index (CPI) has measured changes in prices through: the Great Depression of the 1930s, wartime, international commodity price shocks, fixed and floating exchange-rate regimes, the passing of the Reserve Bank Act in 1989, to the present day. The numbers tell the story, and provide unique insight into New Zealand’s history.

Economic indicators tell this story

Inflation, exports, and unemployment are three key economic indicators. We use these three measures in this article to picture the economy at different points in time.

The CPI measures inflation – changes in the level of prices New Zealand households face. Agricultural products, such as milk, wool, and meat, have always been a key driver of New Zealand’s economy. Exports, as well as providing income for New Zealand, can also indirectly affect the CPI – for example, when export lamb prices increase this is reflected in the domestic price we pay for lamb. Unemployment can be a measure of welfare and the strength of the economy.

The beginning

The Census and Statistics Act 1910 created the Office of the Government Statistician (Statistics NZ, 2013). Four years later we collected the first retail price index numbers – starting with the June quarter of 1914.

Figure 1 shows the official index numbers available annually in the September quarter of each subsequent year, until 1919. Index numbers then became available in the March and September quarter each year, and then quarterly from the September 1925 quarter. Our currency at the time was New Zealand pounds, shillings, and pence, which was issued by six main trading banks (Reserve Bank, 2007).


Inflation was relatively high during World War I and immediately after. Prices rose 85.5 percent, and averaged a 9.6 percent increase each year, from the June 1914 quarter to the March 1921 quarter. Unemployment in 1916 was 7.4 percent, as measured by the 1916 Census. Export prices were also increasing during this time – up 45 percent between 1915 and 1920.

In the September 1921 quarter, retail prices fell for the first time since the start of the CPI. They fell 14.0 percent over the four years from the March 1921 quarter to the March 1925 quarter. Export prices were volatile at this time. They fell 5 percent in 1921, a further 22 percent in 1922, and then rose 21 percent in 1923.

In 1929 the Wall Street sharemarket crashed and the Great Depression began. Between the March 1929 quarter and the December 1933 quarter the CPI fell 20 percent. From 1929 to 1933 export prices fell 46 percent overall, with export butter prices falling 45 percent. Unemployment peaked at 33.2 percent in 1933. In response to the depression, our government devalued the exchange rate (as did other countries) by 25 percent in 1933 (Reserve Bank, 2007), to improve export competitiveness.

Figure 1

Graph, 100 years of the CPI, 1914 to 33


In 1934 the CPI showed that the overall level of prices increased for the first time in five years, as the world slowly recovered from the depression. Export prices rose 25 percent between 1933 and 1934. By 1936, the unemployment rate had dropped back to 18.8 percent.

In 1938, the government implemented comprehensive foreign-exchange rate controls, including import licences being required for many manufactured products (Reserve Bank, 2007). At the start of World War II in 1939, the government introduced price controls (restrictions on the price that could be charged for specific goods and services), which continued after the war was over. In the 1940s, prices increased 31.4 percent; an average 2.8 percent a year.

Meat prices in the CPI jumped 25.7 percent at the end of 1947, more than matching the 21 percent increase in export meat prices, and the overall 25 percent increase in export prices. In 1948, the New Zealand pound was revalued to again be equal to the British pound sterling (Briggs, 2003).

In 1950, the export price of wool increased 107 percent, driven by wool purchased by the United States military during the winter campaign of the Korean War. This influenced a boom in our sheep farming industry. Over the decade from 1948 to 1958, New Zealand’s sheep population rose 42 percent – to over 46 million. This boom also affected the unemployment rate, which in 1951 was 1.9 percent, but continued to fall until it reached 1.1 percent in 1961.

Figure 2

Graph, 100 years of the CPI, 1934 to 53


In 1965 the wool boom ended – wool export prices fell 22 percent. In 1967 overall export prices fell 9 percent, and wool prices fell another 19 percent.

Following this, in November 1967, the government devalued the New Zealand dollar by 19.45 percent, again to improve export competitiveness. In the year to the June 1967 quarter, CPI prices had risen 6.4 percent, though annual percentage change remained below 7 percent until the December 1970 quarter.

In 1973, the international price of oil tripled, the first of several sharp changes to the oil price known as the ‘oil-price shocks’. These increases fed directly into transport costs in New Zealand. The CPI increased more than 10 percent in the year to the December 1973 quarter, and the annual change in prices continued above 10 percent for the next decade.

However, unemployment in 1971 and 1976 was relatively low – 1.8 percent and 2.7 percent, respectively.

Figure 3

Graph, 100 years of the CPI, 1954 to 73


Between 1974 and 1984 inflation was high and prices nearly quadrupled – an average of 13.2 percent a year. Unemployment slowly increased, reaching 5.4 percent in 1981. In the September 1979 quarter electricity prices increased 27 percent, following changes in government price controls.

In 1979, a second oil-price shock hit the economy, and unemployment continued to rise, reaching 8.7 percent by 1986. In the 1980s CPI prices almost tripled – up an average of 11.4 percent a year.

In 1982, the government implemented a wage–price freeze; neither prices nor wages could be increased. In the June 1983 quarter the CPI annual percentage increase dropped to single digits for the first time since 1973. The wage–price freeze ended in 1984, when the dollar was devalued by 20 percent (July 1984) and then floated (March 1985). The government also phased out agricultural subsidies and reduced import controls.

In October 1986, government introduced a goods and services tax (GST) of 10 percent. This influenced an 18.9 percent increase in the CPI for the year to the June 1987 quarter – the previous peak had been 18.4 percent for the year to the March 1980 quarter. In July 1989, GST increased further (from 10 percent to 12.5 percent), reflected in a 4.0 percent increase in the CPI in the September 1989 quarter.

The Reserve Bank of New Zealand Act 1989 took effect in 1990.

The Policy Targets Agreement, between the Minister of Finance and the Governor of the Reserve Bank, stated that “the Reserve Bank should formulate and implement monetary policy with the intention of achieving price stability”, with a formal annual inflation target of 0 to 2 percent (Reserve Bank, 1990).

Figure 4

Graph, 100 years of the CPI, 1974 to 93


The 1990s saw the start of a period of relatively low and stable inflation, which continues today. Over the 1990s decade, prices increased 20.0 percent – an average of 1.8 percent a year. 

The Employment Contracts Act 1991 made substantial changes to rules around employment, and aimed to promote an efficient labour market. Real gross domestic product decreased 1.1 percent in 1992, but recovered after this, to increase by 6.4 percent in 1994.

Unemployment also peaked in 1992 (10.4 percent), but started to decrease after this, to reach 6.6 percent in 1997.

In December 1996, the Policy Targets Agreement band widened to 0 to 3 percent, and in September 2002 it changed to 1 to 3 percent.

Falling interest rates led briefly to annual deflation in 1999. After the June 1999 quarter, we removed interest rates and residential sections from the CPI. Annual price change has exceeded 5 percent on only two occasions since 1999 – in 2008, when rising petrol prices briefly took inflation above 5 percent, and in October 2010, when GST increased from 12.5 percent to 15 percent, influencing a 5.3 percent increase in the CPI for the year to the June 2011 quarter.

Figure 5 

Graph, 100 years of the CPI, 1994 to 2014


In the past 100 years, annual price change has ranged from an 11.1 percent decrease in the year to the March 1922 quarter, to an 18.9 percent increase in the year to the June 1987 quarter. 

The CPI has tracked how prices have changed in New Zealand since 1914, to provide a rich window into our economy and society for historians, statisticians, and the general public.

Note about data sources used in this article

The unemployment estimates used in this article for before 1986 were calculated using census data.

The Long-term data series available on our website was the data source. The disclaimer applies to the unemployment estimates used in this article.

The Household Labour Force Survey, which has a different coverage and scope, was the post-1986 data source.


Briggs, P (2003). Looking at the numbers: A view of New Zealand’s economic history. Wellington: NZIER.

Dalziel, P, & Lattimore, R (2004). The New Zealand macroeconomy. Striving for sustainable growth with equity (5th edition). Auckland: Oxford University Press.

Reserve Bank of New Zealand (1990). Policy targets agreement. Available from

Reserve Bank of New Zealand (2007). The Reserve Bank and New Zealand’s economic history. Available from

Statistics NZ (2013). A history of census taking in New Zealand. Available from

Statistics NZ (nd). Long-term data series. Available from

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