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Consumers Price Index: December 2009 quarter
Embargoed until 10:45am  –  20 January 2010
Commentary

Consumers price index quarterly movement

The consumers price index (CPI) recorded a decrease of 0.2 percent in the December 2009 quarter, following increases of 1.3 percent and 0.6 percent in the September 2009 and June 2009 quarters, respectively.

Four groups decreased, with food (down 2.4 percent) being the most significant contributor. Other downward contributions came from alcoholic beverages and tobacco (down 1.0 percent), communication (down 0.6 percent), and household contents and services (down 0.1 percent), while the education group recorded no overall change.

Six groups recorded increases: transport (up 1.5 percent), clothing and footwear (up 1.8 percent), housing and household utilities (up 0.2 percent), recreation and culture (up 0.4 percent), health (up 0.6 percent), and miscellaneous goods and services (up 0.1 percent).

The most significant individual downward contributions came from lower prices for lettuce (down 63.5 percent), audio-visual equipment (down 9.0 percent), and tomatoes (down 32.3 percent).

Index Points Contribution to Consumers Price Index
Group December 2009 quarter

Food
Alcoholic beverages and tobacco
Communication
Household contents and services
Education
Miscellaneous goods and services
Health
Recreation and culture
Housing and household utilities
Clothing and footwear
Transport

-5.01
-0.71
-0.20
-0.08
-0.01
0.04
0.33
0.44
0.50
0.84
2.28
All groups CPI -1.58
Note: Points contribution may not sum to total due to rounding.

Graph, Index points contribution to consumers price index.

Distribution of item-level movements

The table below outlines the distribution of price movements in the September 2009 and December 2009 quarters. The CPI has been partitioned into those national item-level indexes that increased, showed no change, or decreased.

Distribution of Item-level Index Movements
National item-level index movements

June 2009
qtr
to September 2009 qtr

September 2009
qtr
to December 2009 qtr

Increase in price
Number of items
Percentage of all items
Percentage of expenditure weight
Index points contribution
Percentage point contribution
Weighted average price increase (%)
397
57.2
67.3
18.3
1.7
2.5
341
49.1
54.2
11.3
1.0
1.9
No change in price
Number of items
Percentage of all items
Percentage of expenditure weight
118
17.0
9.4
91
13.1
8.8
Decrease in price
Number of items
Percentage of all items
Percentage of expenditure weight
Index points contribution
Percentage point contribution
Weighted average price decrease (%)
179
25.8
23.3
-4.9
-0.5
1.9
262
37.8
37.1
-12.9
-1.2
3.2

The distribution of item-level movements shows that in the December 2009 quarter:

  • the percentage of expenditure weight of items that increased in price fell significantly, while the percentage of expenditure weight of items that decreased in price rose.
  • the weighted average price increase fell, while the weighted average price decrease rose significantly.
  • the weighted average price decrease is now greater than the weighted average price increase.
  • the 11.3 index points contribution of those items that increased in price is the smallest in at least five years and compares with a quarterly average of 16.8 index points over the past three years.

These factors resulted in a 0.2 percent decrease in the CPI for the December 2009 quarter, following an increase of 1.3 percent in the September 2009 quarter.

CPI annual movement

The CPI increased 2.0 percent in the year to the December 2009 quarter, following increases of 1.7 percent and 1.9 percent for the years to the September 2009 and June 2009 quarters, respectively.

Nine of the 11 groups in the CPI made upward contributions to the increase in the year to the December 2009 quarter. The most significant upward group contributions came from transport (up 3.7 percent), housing and household utilities (up 1.6 percent), and food (up 1.4 percent).

The recreation and culture group (down 0.5 percent) and the communication group (down 0.2 percent) made downward contributions.

The most significant individual upward contributions came from higher prices for the purchase of second-hand cars (up 13.3 percent) and petrol (up 3.3 percent).

The most significant individual downward contributions came from lower prices for international air transport (down 9.6 percent), audio-visual equipment (down 14.8 percent), and overseas package holidays (down 10.5 percent).

CPI analytical series

In the December 2009 quarter, the tradable component decreased 0.5 percent, following increases of 1.6 percent and 0.8 percent in the September and June 2009 quarters, respectively. The non-tradable component increased 0.1 percent in the December 2009 quarter, following increases of 1.0 percent and 0.5 percent in the September and June 2009 quarters, respectively.

For the year to the December 2009 quarter, the non-tradable component increased 2.3 percent. The most significant upward contributions came from local authority rates and payments and from vehicle relicensing fees. The 2.3 percent annual increase in the non-tradable component is the lowest since the year to the December 2001 quarter, reflecting relatively low annual increases for electricity, rentals for housing, and the purchase of new housing.

The tradable component rose 1.5 percent for the year to the December 2009 quarter. The most significant upward contribution came from the purchase of second-hand motor cars.

 Graph, Consumers price index, tradables, non-tradables, and all groups - quarterly indexes.

In the December 2009 quarter, the trimmed mean measures, which exclude extreme price increases and decreases, recorded quarterly movements ranging from no change to 0.1 percent. This indicates that underlying price change for the quarter was quite flat.

The annual trimmed mean measures recorded annual increases of between 2.2 percent and 2.4 percent, which are higher than the 2.0 percent increase in the all groups CPI.

 Graph, Trimmed means and all groups, percentage changes.

Food

Prices for the food group decreased 2.4 percent in the December 2009 quarter, following rises of 1.7 percent and 0.9 percent in the September and June 2009 quarters, respectively. Although food prices fell in the latest quarter, prices are up 1.4 percent in the year to the December 2009 quarter and are 10.9 percent higher than two years ago. If food prices had remained constant from the September 2009 quarter, the CPI would have increased by 0.3 percent in the December 2009 quarter.

The most significant downward contribution came from lower prices for vegetables (down 17.6 percent) which accounted for well over half of the decrease in food prices. Lower vegetable prices were largely driven by lettuce (down 63.5 percent) and tomatoes (down 32.3 percent). Vegetable prices fell strongly from their winter peak in July that was higher than usual, following unusually cold weather in May.

Other significant contributions were from the meat, poultry, and fish (down 2.5 percent) and grocery food (down 1.0 percent) subgroups. These are the largest quarterly falls in meat, poultry, and fish prices since a 2.8 percent fall in the March 1995 quarter, and in grocery food prices since the series began in the June 1999 quarter.

The food group increased 1.4 percent from the December 2008 quarter to the December 2009 quarter. This is the lowest annual increase in the food group since a 1.1 percent increase for the year to the June 2005 quarter.

Four of the food subgroups increased in the year to the December 2009 quarter, with the most significant contributions coming from higher prices for the non-alcoholic beverages (up 7.7 percent), restaurant meals and ready-to-eat food (up 2.9 percent), and grocery food (up 1.6 percent) subgroups. The only subgroup to decrease in the year to the December 2009 quarter was fruit and vegetables (down 5.2 percent).

The most significant individual upward contribution to the annual movement came from soft drinks (up 9.9 percent).

The latest annual increase in food prices of 1.4 percent was influenced by a number of cases of food manufacturers reducing the size of their products. These size reductions are treated as price increases in the CPI.

 Graph, Food group and selected classes, quarterly indexes.

Transport

Transport group prices increased 1.5 percent in the December 2009 quarter, following increases of 3.1 percent and 0.6 percent in the September and June 2009 quarters, respectively.

The most significant individual upward contributions came from higher prices for international air transport (up 13.9 percent) and the purchase of second-hand motor cars (up 1.6 percent). The increase for international air transport is the largest since the series began in the March 1981 quarter. Prices usually rise in December quarters, although this quarter's increase was larger than usual. The index recorded a 28-year low in the June 2009 quarter.

The transport group increased 3.7 percent from the December 2008 quarter to the December 2009 quarter, ending three consecutive annual decreases. The most significant individual upward contributions came from higher prices for second-hand motor cars (up 13.3 percent), petrol (3.3 percent), and new motor cars (up 9.6 percent).

The 13.3 percent annual increase in the price of second-hand cars is the largest rise since the year to the December 1987 quarter. Reports have indicated that one factor for the increase in the price of second-hand motor cars is a shortage of vehicles, particularly those for importation from Japan. The annual rise in petrol prices ends four consecutive annual falls since petrol prices peaked in the September 2008 quarter.

 Graph, Transport group and selected classes, quarterly indexes.

Other groups

In the December 2009 quarter, upward movements were recorded for the following groups: clothing and footwear, housing and household utilities, recreation and culture, health, and miscellaneous goods and services. Combined, these groups contributed 2.14 index points to the overall CPI movement.

The clothing and footwear group rose 1.8 percent in the December 2009 quarter. There were higher prices for summer seasonal clothing, such as t-shirts, which were about 10 percent higher than in the December 2008 quarter. Summer seasonal clothing prices are collected only in December quarters. For the year to the December 2009 quarter the clothing and footwear group rose 3.1 percent.

The housing and household utilities group rose 0.2 percent in the December 2009 quarter, driven by higher prices for rentals for housing and for the purchase of new housing. A downward contribution came from lower electricity prices (down 0.3 percent), influenced by lower summer rates for some electricity retailers in the South Island. Housing and household utilities prices rose 1.6 percent for the year to the December 2009 quarter, with higher prices for rentals for housing (up 1.0 percent) and electricity (up 2.1 percent). The annual increases for rentals for housing and electricity are the lowest in seven years.

The 0.4 percent increase in the recreation and culture group came from higher prices for overseas package holidays (up 9.3 percent), and domestic accommodation services (up 4.6 percent). Prices are usually higher in December quarters for overseas package holidays and domestic accommodation. The most significant downward contribution came from lower audio-visual equipment prices (down 9.0 percent).

A 0.1 percent increase in miscellaneous goods and services included a fall of 6.9 percent for credit services, influenced by banks reducing dishonour fees.

In the December 2009 quarter, downward movements were recorded for alcoholic beverages and tobacco (down 1.0 percent), communication (down 0.6 percent), and household contents and services (down 0.1 percent). These groups contributed -0.98 index points to the overall CPI movement. Prices for alcohol consumed off licensed premises fell 2.2 percent, influenced by significant specialling in December.

The education group remained unchanged overall for the December 2009 quarter.

For technical information contact:
Russell Hewitt or Daniel Griffiths
Wellington 04 931 4600
Email: info@stats.govt.nz

Next release ...

Consumers Price Index: March 2010 quarter will be released on 20 April 2010.

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