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Price Index News: October 2013

1. Short stories

Dairy export prices and volumes move upwards over 20 years

The article Dairy export prices and volumes move upwards over 20 years and infographic, examines how dairy export prices and volumes changed between 1992 and 2012.

The dealer-to-household used-car market

The dealer-to-household used-car market article looks at some facts and figures about the used cars dealers sold to households over the six years between the June 2007 and June 2013 quarters.

A decade of change: Tracking New Zealand’s growing and declining export markets from 2002 to 2012

A decade of change: Tracking New Zealand’s growing and declining export markets from 2002 to 2012 examines the top contributors to export revenue growth over the decade to 2012, by country and by commodity.

Delving into detail: A regional breakdown of tomato prices

Delving into detail: A regional breakdown of tomato prices looks at how much we pay around the country for fresh tomatoes.

Take your pick of apple varieties in the food price index

Take your pick of apple varieties in the food price index examines apple prices and varieties collected for the food price index.

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2. Nuts and bolts

How we measure other private transport services in the CPI

How we measure other private transport services in the CPI explains the sources and methods used to compile the ‘other private transport services’ class of the consumers price index (CPI).

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3. On the horizon

KiwiSaver contribution rise affects labour cost index

On 18 October, we will release Labour Cost Index (All Labour Costs): June 2013 quarter.

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 in the superannuation costs component of the June 2013 quarter release.

Local authority rates in the CPI

The CPI Local Authority Rates Survey is conducted annually in the September quarter, for a sample of territorial authorities and regional councils. We survey rates once a year because local authorities usually strike their rates annually.

While normally any rate changes come into effect from 1 July, not all territorial authorities and regional councils set rates during the September quarter. The small number of rates struck after the September quarter, combined with the timing of survey returns and processing, result in rates changes being shown in both the September and December quarter CPIs. For the past five years, between 80 and 90 percent of the weight in the sample of local authority rates has been included in the September quarter CPI.

See Property rates and related services in the CPI for more information on local authority rates.

Alcohol excise duty increase

The annual indexation adjustment of the excise duty on alcoholic drinks occurred on 1 July 2013. The adjustment was a 0.94 percent increase in the excise duty, based on the movement in the 'CPI less credit services' index from the March 2012 quarter to the March 2013 quarter.

The effect on retail prices should show fully in the CPI for the September 2013 quarter, depending on the timing of price increases in pubs, clubs, restaurants, and liquor stores, and the timing of price collection by Statistics NZ staff.

Increases within the CPI ‘other private transport services’

The 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 private motor car, administered by the NZ Transport Agency, increased 10.4 percent (or $5.00 per 1,000km) on 1 July 2013. Transaction fees associated with the purchase of road user charges remained unchanged, and will moderate this increase. Excise duty on petrol also increased – by 3 cents a litre on 1 July 2013. The full impact of both these price increases will be shown in the September 2013 quarter CPI.

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4. Development updates

CPI Advisory Committee 2013 – next steps

In July 2013, we released the Report of the Consumers Price Index Advisory Committee 2013. The committee met in early May to undertake an independent review of the methods and practices used to compile the CPI.

The report includes the committee’s 16 recommendations. They endorse the current practices used to compile the CPI, and recommend ways the CPI can be further enhanced. See the report for more information.

The committee’s key recommendations 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.

Many of the recommendations will be implemented during the current three-yearly CPI review, which will be completed in October 2014.

We will consult with the CPI user community to clarify their needs, and to prioritise the remaining recommendations. We plan to release a public consultation paper in late October 2013, which will inform consultation planned for November and December 2013.

For more information on the 2013 CPI Advisory Committee, please contact:

Nick Martelli
Wellington
04 931 4600

Email: info@stats.govt.nz

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 updated annually. 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:

  • agriculture (including FEPI)
  • 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 also implemented lower-level PPI commodity weights and updated product samples for the primary metal and metal product manufacturing, fabricated metal product manufacturing, and electricity, gas, and water industries for the June 2013 quarter (published 19 August 2013). These updated commodities are:

  • basic iron and steel
  • products of steel
  • copper, nickel, aluminium, alumina, lead, zinc, and tin, unwrought
  • semi-finished products of copper, nickel, aluminium, lead, zinc, and tin, or their alloys
  • structural metal products and their parts
  • prefabricated buildings (of metal)
  • metal containers and steam generators and their parts
  • other fabricated metal products
  • fabricated metal product, machinery, and equipment manufacturing services
  • other manufacturing services
  • electrical energy
  • electricity distribution services
  • gas supply
  • gas distribution services
  • water, including natural water, ice, and steam
  • water distribution services.

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

James Griffin
Wellington
04 931 4600

Email: info@stats.govt.nz

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.

At the start of the CPI rolling review, the CPI basket items we track at retail outlets were organised into eight review groups. Consumer electronics items were to be reviewed annually, in group four and group eight. However, a decision was made to reduce the number of review groups to seven by reviewing consumer electronics items once, in the last group. This is because external data about the characteristics of consumer electronics items was not available at the time that the first scheduled review of that group was to commence.

Changes actioned in the first four review groups are:

The fifth and sixth groups of the review comprised food and non-food items tracked at supermarkets. The bulk of the food items were allocated to the fifth group. The remaining food items, along with the non-food items, were allocated to the sixth group.

For the fifth and sixth groups, we reviewed the mix of brands tracked at supermarkets, to ensure they continue to reflect market shares. The mix of brands was adjusted for 13 of the 149 branded food and non-food items tracked at supermarkets. The mix of brands for the remaining items already aligned closely with their market shares.

Changes to the fifth group and the food items of the sixth group were actioned in the Food Price Index: August 2013. All changes to the fifth and sixth groups will be implemented in the Consumers Price Index: September 2013 quarter, released 16 October 2013.  

For the seventh and final group, we are reviewing the sample of retail outlets for home appliances, audio-visual and computing equipment, electronic equipment and games, builders’ hardware, and garden supplies. We have reallocated the sample of retail outlets we visit for:

  • building and plumbing supplies
  • security equipment
  • small home appliances
  • audio-visual and computing equipment
  • video games and consoles
  • electronic vehicle accessories.

We have also expanded price collection for pre-recorded Blu-ray discs, pre-recorded DVDs, tablets, MP3 players, and computer software, to include local online retailers.

Changes to the seventh group will be implemented in the Consumers Price Index: December 2013 quarter, which will be released on 21 January 2014.

For more information on the review, please contact:

Nick Martelli
Wellington
04 931 4600

info@stats.govt.nz

Labour cost index review

Statistics New Zealand will be updating the relative importance of occupations and industries in the labour cost index (LCI), once 2013 Census data is available. The LCI measures changes in wage rates and non-wage labour costs.

The review will help maintain the relevance of the LCI. The 2013 Census is a key data source for the review, as was the 2006 Census for the reweight in 2008. Other important data sources include Statistics NZ's Business Frame (a register of New Zealand businesses), the labour cost survey, the quarterly employment survey, and linked employer-employee data.

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

The reweight will be based on the existing industry and occupation groups, under the New Zealand Standard Industrial Output Classification and the Australia and New Zealand Standard Classification of Occupations, respectively. The sample of jobs being tracked will be refreshed as part of the review, to reflect relative growth and decline in occupations and industries.

The first reweighted indexes will be released for the September 2014 (salary and wage rates) and June 2015 quarters (non-wage labour costs).

For further information about the LCI review, or if you would like to meet to discuss the review, please contact:

Ludeth Mariposa
Wellington
04 931 4600

Email: info@stats.govt.nz

CPI review update

In June 2013 we began a review of the consumers price index (CPI). Regular CPI reviews are carried out every three years to help ensure that the CPI basket of goods and services continues to reflect household spending patterns.

The latest review will be implemented when the September 2014 quarter CPI is published in October 2014.

The CPI is made up of a representative ‘basket’ of goods and services purchased by New Zealand households. These goods and services will be reselected as part of the review, and their relative importance updated, using information from the 2012/13 Household Economic Survey (HES) and other sources.

Some of the 2013 CPI Advisory Committee’s recommendations will also be implemented in the review.

The previous CPI review used information from the 2009/10 HES, and was implemented when the September 2011 quarter CPI was published in October 2011.

For more information on the 2014 CPI review please contact:

Nick Martelli
Wellington
04 931 4600

Email: info@stats.govt.nz

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5. 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 PPI 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.

See Review of scope and purpose of the producers price index for a discussion paper about the review.

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6. Release dates

Price index release calendar for the next three months

October 2013

Fri       11 Oct 13           Food Price Index: September 2013
Wed    16 Oct 13    M    Consumers Price Index: September 2013 quarter
Fri       18 Oct 13           Labour Cost Index (All Labour Costs): June 2013 quarter

November 2013

Wed    6  Nov 13    M    Labour Cost Index (Salary and Wage Rates): September 2013 quarter
Wed   13 Nov 13           Food Price Index: October 2013
Wed   20 Nov 13    M    Producers Price Index: September 2013 quarter
Wed   20 Nov 13    M    Capital Goods Price Index: September 2013 quarter

December 2013

Mon    2  Dec 13     M    Overseas Trade Indexes (Prices): September 2013 quarter (provisional)
Mon    2  Dec 13     M    Overseas Trade Indexes (Volumes): September 2013 quarter (provisional)
Thu    12 Dec 13           Food Price Index: November 2013

M= Media conference

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

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