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Price Index News: October 2007

1. Short stories

The price of fish

The price of fish looks at the range and price of fresh fish species that were available in 2005 at supermarkets and fish shops. Tarakihi and gurnard were the most commonly available species. Snapper was widely available in the North Island and the top of the South Island, while consumers further south were partial to sole. Budget-conscious consumers might have plumped for hoki ($12.12 per kg) or red cod ($13.18), while buyers of snapper and blue cod had to dig a little deeper, paying on average $28.75 and $26.59 per kg, respectively.

Water, wind and kilowatts

Both households and businesses rely heavily on electricity. Water, wind and kilowatts takes a look at how the electricity generation and supply industry operates and how the prices the industry charges have changed over time. The article also looks at how the electricity prices paid by households have tracked over the past 23 years.
redevelopment in New Zealand, so Statistics NZ will be listening closely to the experience of other countries.

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2. Working with others

Ottawa group

The tenth meeting of the Ottawa Group, an international research forum for consumer price index (CPI) specialists, is being held this month in Ottawa, Canada. Hosted by Statistics Canada, the meeting returns to its namesake city where the first such gathering took place in 1994. Topics and sessions on the agenda for the event include: price measurement of specific products, indexes for population groups, telecommunications price indexes, spatial indexes, treatment of owner-occupied housing, bias, hedonics and the quality of price indexes.

Statistics New Zealand is presenting two papers. The first details a comparative study of the methods, practice and resources used to compile the CPIs produced by Statistics New Zealand and Statistics Norway. The second is an analysis of the retrospective superlative New Zealand CPI calculated between the June 2002 quarter and the June 2006 quarter. In addition, a paper outlining the impact of various weighting and price updating options for the basket of goods and services in the New Zealand CPI is being made available at the conference.

Statistics NZ papers:

The Statistics New Zealand and SSB Consumers Price Indexes: A Comparison

New Zealand CPI: Retrospective Superlative Index and Impact of Alternative Housing Weights

New Zealand 2006 CPI Review: Price Updating

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3. Nuts and bolts

International practices for business price index price collection

Statistics New Zealand is progressively redeveloping a suite of business price indexes (BPIs) comprising the producers price index (PPI), the farm expenses price index (FEPI) and the capital goods price index (CGPI). As part of the redevelopment, New Zealand practice for various aspects of BPI compilation has been compared with the practices of five other Organisation for Economic Co-operation and Development countries. International practices for business price index price collection looks at how BPI prices are collected in New Zealand and in the five other countries. International comparisons of other aspects of BPI compilation will be included in subsequent issues of Price Index News.

Redevelopment of the education-related travel price indexes

The overseas trade in services price indexes were first developed in 1999 to complement existing price and volume indexes for merchandise trade. Statistics New Zealand has been progressively reviewing the services price indexes since 2005 to ensure they remain relevant. Redevelopment of the education-related travel price indexes reports on the redevelopment of the imports and exports indexes for education-related travel services.

Local authority rates in the CPI

With a weighting of 2.16 percent of the consumers price index (CPI), the local authority rates and payments index is one of the more important of the goods and services in the basket. Local authority rates in the CPI explains how the index is compiled.

How new car price changes are measured in the CPI

Purchase of new motor cars had an expenditure weight of 1.69 percent of the consumers price index (CPI) as at the June 2006 quarter. The methods used to compile the new cars index are explained in How new car price changes are measured in the CPI.

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4. On the horizon

Introduction of free early childhood education

On 1 July 2007, 20 hours of free childcare for three- and four-year-olds were introduced by participating childcare centres throughout New Zealand. The impact of this will be shown in the September 2007 quarter CPI release.

Cheaper general practitioner visits for 25- to 44-year-olds

On 1 July 2007, increased government subsidies took effect for 25- to 44-year-olds visiting doctors at interim-funded primary health organisations (PHOs). The impact of this change on general practitioner fees will be shown in the September 2007 quarter CPI for medical services. Additionally, the full effect of reduced prescription charges for people aged six years and over who are enrolled with interim-funded PHOs will be shown in the September 2007 quarter CPI for pharmaceutical products.

Local authority rates

The CPI local authority rates survey is conducted once a year in the September quarter. The rates are surveyed for a sample of territorial authorities and regional councils. Rates are surveyed once a year because local authorities usually strike their rates annually. Newly set rates normally come into effect on 1 July, with changes shown in the CPI in the September and December quarters.

Increase in annual leave entitlement

From 1 April 2007, annual leave entitlements increased from a minimum of three weeks per year to four weeks per year. The changing cost of providing annual leave is one of six non-wage labour costs measured by the labour cost index (all labour costs). Therefore, the impact of the recent increase in minimum annual leave entitlements will be shown in the Labour Cost Index (All Labour Costs): June 2007 quarter.

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5. Development updates

Labour cost index review

Statistics New Zealand is in the early stages of the labour cost index (LCI) review project. The LCI measures changes in wage rates and non-wage labour costs.

The reweight will help to ensure that 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 to be used include Statistics New Zealand's Business Frame (a register of New Zealand businesses), the labour cost survey and the quarterly employment survey (QES).

The new expenditure weights will be assigned at the sector of ownership (based on whether the organisation is owned privately, by central government or local government), by industry group by occupation level. The expenditure weights will reflect both the number of jobs filled by paid employees, and the pay rates for those jobs.

It is likely that the first reweighted indexes will be released for the September 2008 quarter (wage and salary rates) and the June 2009 quarter (non-wage labour costs). The reweight will be based on the existing LCI sample and the existing industry and occupation groups.

Following the reweight using the existing classifications, Statistics NZ plans to implement more up-to-date industry (Australia and New Zealand Standard Industrial Classification 2006) and occupation (Australian and New Zealand Standard Classification of Occupations) classifications in the LCI. The new industry and occupation classifications are structured differently to the existing classifications used in the LCI, and the LCI sample will be refreshed to ensure it adequately represents the new classification structures. First LCI results using the new classifications are expected to be released in its September 2009 quarterly report. First QES results using the new industry classification should be released at about the same time.

The LCI reweight project will include initial research into the feasibility of including irregular wage and salary bonus payments in the LCI. A recommendation to include bonuses in the LCI was made by Adolf Stroombergen of Infometrics in his official statistics research paper on improving wage statistics. As part of this research, Statistics New Zealand will be talking to users about their requirements for, and potential uses of, bonus-payment information.

We would like to hear your views about the LCI. If you would like to discuss the LCI review, or be kept informed of progress, please contact:

Adam Dustin
Wellington 04 931 4600
Email: info@stats.govt.nz

Update on the business price index redevelopment

As reported previously, Statistics New Zealand is progressively redeveloping a suite of business price indexes comprising the producers price index (PPI), the farm expenses price index (FEPI) and the capital goods price index (CGPI). This note provides an update on recent progress.

Redevelopment is now underway on the following industries: agriculture (including FEPI); heavy and civil construction, and construction trade services (within construction); petroleum, coal and basic chemical manufacturing; rubber, plastics and other chemicals; other manufacturing; finance and insurance; computer services (within business services); real estate, and other property services; water transport, and other transport and storage services; retail trade; and wholesale trade. Current redevelopment provides further information about the project and progress to date.

Upcoming CPI review

A minor review of the consumers price index (CPI) will be implemented when the September 2008 quarter index is released in October 2008. The review will focus on reselecting and reweighting the basket of representative goods and services, using information from the 2006/07 Household Economic Survey (HES) and other sources. The index was last reweighted in 2006, based on the 2003/04 HES.

The New Zealand Household Expenditure Classification being used for the CPI was used for the first time in the HES for the 2006/07 survey. This will simplify the process of mapping HES expenditure to the CPI basket of representative goods and services.

The 2006 CPI review resulted in some significant relative changes in expenditure weights, which caused disruption to the annual trimmed mean and weighted percentile measures during the transition across the June 2006 quarter reweight. Statistics New Zealand made two sets of annual trimmed mean and weighted percentile measures available during the transition across the June 2006 quarter reweight – one based on June 2002 quarter weights and one based on June 2006 quarter weights. Before implementing the 2008 CPI review, Statistics New Zealand plans to investigate whether it is feasible to adopt an alternative methodology that would avoid potential disruption of the type that occurred in 2006. The alternative being considered is to compile the quarterly trimmed mean and weighted percentile measures using seasonally adjusted basket movements, and then deriving the annual trims directly from the quarterly trims.

For further information on aspects of the 2008 CPI review please contact:
Chris Pike
Wellington 04 931 4600
Email: info@stats.govt.nz

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6. Making contact

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
  • resulting 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 of each Hot Off The Press information release. In addition, you can contact:

John Morris (Manager – Prices)
Litia Tapu (Project manager – Business, Labour and Overseas Trade Price Index outputs)
Patricia Jennings (Project manager – Business Price Index development)
Daniel Griffiths (Project manager – Consumers Price Index outputs)
Chris Pike (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

October 2007

Mon 15 M Consumers Price Index: September 2007 quarter
Food Price Index: September 2007
Fri 19 Labour Cost Index (All Labour Costs): June 2007 quarter

November 2007

Mon 5 M Labour Cost Index (Salary and Wage Rates): September 2007 quarter
Tue 13 Food Price Index: October 2007
Wed 14 M Producers Price Index: September 2007 quarter
Capital Goods Price Index: September 2007 quarter

December 2007

Tue 11 M Overseas Trade Index (Prices): September 2007 quarter (provisional)
Overseas Trade Index (Volumes): September 2007 quarter (provisional)
Wed 12 Food Price Index: November 2007
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