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Price Index News: July 2013

1. Short stories

Bananas appeal to Kiwis

Bananas appeal to Kiwis (and a related infographic) take a look at New Zealand's favourite fruit. Together, the article and infographic highlight the retail prices we pay, how our situation compares with Australia’s, and where we source our bananas from.


2. Working with others

Pacific International Comparison Program

Statistics NZ participated in the fourth Pacific International Comparison Program (ICP) data validation workshop held in Brisbane from 10–14 June 2013. Around 20 nations and territories from around the Pacific attended.

At this fourth Pacific ICP data validation workshop, we completed within-country and across-country data validation of prices for all four quarters of 2012. The relative importance of these items in each nation or territory was also reviewed.

More about the ICP

The 2011 round of the ICP is a worldwide statistical undertaking, overseen by the World Bank, to collect comparative price data and estimate purchasing power parities (PPPs).  PPP results are used to make inter-country comparisons of price levels, and measures of output and welfare, for over 180 countries. As an Organisation for Economic Cooperation and Development (OECD) member, Statistics NZ participates in the Purchasing Power Parity Program.

To help with price comparisons within the Pacific region, Statistics NZ also participates in the Pacific ICP. This programme involves 21 Pacific nations and territories, and is led by the Australian Bureau of Statistics. To date, we have helped select goods to be priced, and contributed to discussions on price collection issues in the Pacific region. We have also collected data for New Zealand.


3. Virtual papers

Ottawa Group 2013 meeting

When Statistics Denmark hosted the 13th meeting of the International Working Group on Price Indexes (the Ottawa Group), in Copenhagen from 1–3 May 2013, Prices senior researcher Frances Krsinich attended on behalf of Statistics NZ. She met with more than 50 experts in price measurement from around the world.

Frances presented Using the rolling year time product dummy method for quality adjustment in the case of unobserved characteristics. A paper she co-authored with Jan de Haan of Statistics Netherlands, Scanner data and the treatment of quality change in rolling year GEKS price indexes, was presented in a poster session.

See the Ottawa Group 2013 agenda for these two papers and all the others presented.

Participants discussed a wide range of topics, with sessions on:

  • housing price indexes
  • commercial property indexes
  • measuring service prices
  • sampling and data collection
  • 'difficult to measure' goods and services
  • seasonal adjustment and analytical series
  • real-time estimations of superlative indexes
  • international comparability of price developments and price levels.

The Scanner data and the treatment of quality change in rolling year GEKS price indexes paper by Krsinich and de Haan, was recently accepted for publication by the Journal of Business and Economic Statistics. The paper discusses a recently developed method for fully quality-adjusting price indexes from scanner data, using product characteristic information, including appropriate imputation of price change for new and disappearing products. This method was empirically tested using scanner data for different New Zealand consumer electronics products.

More about the Ottawa Group

The Ottawa Group meets every two years in a different country – in 2011, Statistics NZ hosted the 12th meeting in Wellington.

The group formed in 1994 to provide a forum for specialists to share their experiences and discuss research on crucial problems of measuring price change. The group’s focus is on applied research, particularly (though not exclusively) in the area of consumer price indexes. Members examine advantages and disadvantages of various concepts, methods, and procedures in the context of realistic operational environments, supported by concrete examples whenever possible. Participants are specialists and practitioners who work for, or are advisers to, statistical agencies in different countries or international organisations.

4. Nuts and bolts

Clothing and footwear in the CPI

Clothing and footwear in the CPI explains the sources and methods used to compile the clothing and footwear group of the consumers price index (CPI). (This article will be available shortly.)


5. On the horizon

Winter seasonal goods

Consumers buy some goods in the CPI basket mainly during winter. Therefore, we conduct the CPI winter seasonal survey once a year, in the June quarter.

Winter seasonal goods in the basket include winter clothing and footwear, winter-weight duvets, and electric fan heaters. We price these goods in June quarters only, because they have both a limited supply and demand in other quarters. As a result, prices of winter seasonal goods show change only in June quarters.

KiwiSaver contribution rises

From 1 April 2013, the minimum KiwiSaver employer contribution increased from 2 percent of an employee’s gross pay to 3 percent. 

The effect of this change will be shown the superannuation costs component of the June 2013 quarter labour cost index (all labour costs), to be released on 18 October 2013.


6. Development updates

CPI advisory committee report released

An independent advisory committee has endorsed the practices used to compile the consumers price index (CPI) and has recommended ways the CPI can be further enhanced.

On July 10 Statistics NZ published Report of the Consumers Price Index Advisory Committee 2013, which includes the committee’s 16 recommendations.

Key recommendations made by the committee include:

  • endorsing the CPI’s main use (to inform monetary policy setting), and its purpose (to measure inflation experienced by the household sector)
  • reducing the number of regional pricing centres from 15 to between 10 and 12, in order to fund other CPI initiatives, such as providing indexes that measure price change faced by particular subgroups of the population
  • providing the CPI on a monthly basis, with additional costs funded by new spending.

The 2013 committee is the latest in a longstanding series of committees appointed to independently review the methods and practices used to compile the CPI. 

“The committee is a great example of how Statistics NZ is engaging to help ensure that the statistics we produce continue to meet the needs of the user community,” Acting Government Statistician Dallas Welch said.

“Statistics New Zealand’s vision is for New Zealand to become an increasingly informed society through the effective use official statistics. People need to have trust and confidence in these statistics, and this committee's work is a key way of ensuring this happens. I would like to thank the committee members for their recommendations, and the expertise and different perspectives they have brought to the committee process.”

The nine-member committee met for three days in May 2013 and was chaired by former Retirement Commissioner, Diana Crossan.

“The CPI is important to us all because it affects interest rates, it informs wage negotiations, and it is used to adjust New Zealand Superannuation rates and welfare benefits to ensure they maintain their purchasing power,” Ms Crossan said. “The committee’s recommendations will help ensure that the CPI remains relevant for these uses.”

The practice of regularly convening CPI advisory committees is in line with international best practice, as recommended by the International Labour Organization.

“I will consider the committee’s recommendations relative to other potential initiatives in the Official Statistics System,” Mrs Welch said. “However, many of the committee’s recommendations will be implemented as part of the next three-yearly CPI review, which will be completed in October 2014.”

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 table (SUT) produced annually as part of the New Zealand System of National Accounts.

The weights associated with the commodities (approximately 300 are used in the SUT) and the weights attached to each industry are both being updated. These 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).

New weights were introduced in the March 2013 quarter’s PPI. They came mainly from the 2009/10 SUT. These weights apply from a new price reference period (the December 2012 quarter), and were first used to weight price movements from the December 2012 quarter to the March 2013 quarter.

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

Reviewing the business price indexes

Statistics NZ is continuing its 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 maintain the relevance of these indexes and to collect commodity data for use in the national accounts.

We are surveying 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 six-year cycles for most industries, and on three- or 12-year cycles for those remaining.
Currently, we are reviewing these industries:

  • primary metal and metal product manufacturing 
  • fabricated metal product manufacturing
  • agriculture (including FEPI) 
  • electricity, gas, and water
  • telecommunication services
  • Internet service providers and data processing services
  • computer system design and related services
  • forestry and logging
  • aquaculture 
  • fishing
  • hunting and trapping
  • agriculture, forestry, and fishing support services
  • petroleum and coal product manufacturing
  • basic chemical and basic polymer manufacturing
  • fertiliser and pesticide manufacturing
  • pharmaceutical, cleaning, and other chemical manufacturing
  • meat and meat product manufacturing
  • seafood processing
  • dairy product manufacturing
  • fruit, oil, cereal, and other food product manufacturing
  • beverage and tobacco product manufacturing
  • transport equipment manufacturing
  • electronic and electrical equipment manufacturing
  • machinery manufacturing
  • rail transport
  • water transport
  • air and space transport
  • scenic and sightseeing transport.

To date, we have used updated commodity proportions to help balance the production and expenditure estimates of GDP for the following industries:

  • primary metal and metal product manufacturing
  • fabricated metal product manufacturing
  • printing
  • publishing.

When the national accounts industry benchmarks are published in November 2013, we will have used updated commodity proportions to help balance the production and expenditure estimates for other industries. To date these include:

  • electricity, gas, and water
  • forestry and logging
  • agriculture, forestry, and fishing support services
  • 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 transport
  • water transport
  • air and space transport
  • scenic and sightseeing transport.

We have already updated higher-level PPI commodity weights for both the primary metal and metal product manufacturing, and fabricated metal product manufacturing industries, based on information from the commodity data collection. This update was implemented through the annual PPI weight update, which took place for the March 2013 quarter.

We implemented lower-level PPI commodity weights and updated product samples for both the printing and publishing industries for the March 2013 quarter (published 17 May 2013). These updated commodities are:

  • books, maps, music, cards, pictures, and plans
  • newspapers and periodicals, in print
  • publishing, printing, and reproduction services
  • advertising services and provision of advertising.

We will implement lower-level PPI commodity weights and updated product samples for primary metal and metal product manufacturing, fabricated metal product manufacturing, and electricity, gas, and water industries for the June 2013 quarter PPI (published 19 August 2013).

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

James Griffin
Wellington 04 931 4600

Progress with the CPI rolling review of retail outlets

Our ongoing rolling review of the retail outlets we collect prices from for the CPI continues.

The July 2012 issue of Price Index News has more information on the review’s scope.

We have already implemented changes to the first three review groups:

For the fourth group, we reviewed the sample of convenience stores, liquor stores, bars, hospitality clubs, and ready-to-eat food outlets. We reallocated the sample of retail outlets we visit for the following items tracked in the CPI:

  • wine (off-licence) – we now visit more specialist wine stores
  • ready-to-eat food – we have expanded the range of fast food chains we visit.

Some of the changes to the fourth review group were implemented in Food Price Index: April 2013. These changes, plus the remainder, will be implemented in the June 2013 quarter’s CPI, which will be released 16 July 2013.

For the fifth and sixth groups, we are reviewing the mix of brands tracked at supermarkets – for food and non-food items, respectively. This ensures the mix continues to reflect market shares.

We will implement changes to the fifth group in the August 2013 FPI, released 13 September 2013. Changes to the fifth and sixth groups will be seen in the September 2013 quarter’s CPI, released 16 October 2013.

For more information on the review, please contact:

Nick Martelli
04 931 4600 


7. Making contact

Producers price index review of scope and purpose

Statistics New Zealand is reviewing the scope and purpose of the producers price index (PPI).

The PPI is a key economic indicator in most countries, including New Zealand. PPIs are constructed as either output indexes, measuring change in the prices that producers receive for their outputs; or input indexes, measuring change in the prices that producers pay for their inputs, excluding labour and capital.

The PPIs we produce are used to support the calculation of volume estimates of gross domestic product (GDP) in New Zealand’s national accounts. They are also used as indicators of short-term inflationary trends and in contract indexation clauses to reflect changes in prices during the life of commercial contracts.

We have produced our PPIs in essentially their current form for the past 30 years. Over this time the indexes have been re-weighted and re-referenced several times. However, the underlying conceptual basis and coverage are largely unchanged.

As part of our goal to deliver accessible, relevant, and timely statistics for all New Zealanders, we need to ensure the statistics we produce meet the needs of our users, where possible. Therefore, we are keen to hear from and meet users of the PPIs and to understand their needs.

Key issues covered in the review include:

  • principal purpose of the PPI
  • weighting and pricing basis used
  • transactions that are in the PPI’s scope
  • industry and commodity detail and frequency
  • index formula dissemination options.

A discussion paper on the review will be available on the Statistics NZ website shortly.


8. Release dates

Price index release calendar for the next three months

July 2013

Thur  11 Jul 13            Food Price Index: June 2013
Tue   16 Jul 13      M   Consumers Price Index: June 2013 quarter

August 2013

Tue   6  Aug 13     M    Labour Cost Index (Salary and Wage Rates): June 2013 quarter
Mon 12 Aug 13            Food Price Index: July 2013
Mon 19 Aug 13     M    Producers Price Index: June 2013 quarter
Mon 19 Aug 13     M    Capital Goods Price Index: June 2013 quarter

September 2013

Mon  2  Sep 13     M    Overseas Trade Indexes (Prices): June 2013 quarter (provisional)
Mon  2  Sep 13     M    Overseas Trade Indexes (Volumes): June 2013 quarter (provisional)
Fri    13 Sep 13            Food Price Index: August 2013

M= Media conference

This issue of Price Index News was released on Wednesday, 10 July 2013

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