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Household living-costs price indexes – decisions after public consultation
Consulting on new indexes

Purpose

Statistics New Zealand is developing a new set of price indexes to measure the inflation experience of groups of households – the household living-costs price indexes (HLPIs). In October 2015 we asked for submissions so we could hear and understand the views of the wider community on the HLPIs.

This paper presents the decisions we made following the consultation.

We considered three topics for customers to respond to:

  • how we define the household groups
  • how we combine household expenditure patterns
  • how we treat interest and insurance.

See Household-living costs price indexes – public consultation paper (Statistics NZ, 2015) for details on the questions we asked in the consultation and background information.

Thank you to everyone who gave us their views on the HLPIs. The appendix lists organisations that made submissions.

Background on the HLPIs

The consumers price index (CPI) measures the change in the prices of goods and services acquired by New Zealand-resident private households. It is an aggregate measure that represents the price change experienced on average by households. The ability of a whole-of-population average to represent any particular household, or group of households, depends on the homogeneity of expenditure patterns – that is, how much or how little household expenditure patterns differ from the average – and on the variation in inflation rates for different commodities.

The new HLPIs will highlight differences in household expenditure patterns and how they affect the distribution of household inflation.

In August 2014, we announced our intention to provide a suite of HLPIs, to provide greater insight into the inflation experienced by eight household groups:

  • beneficiaries
  • income quintiles (five groups)
  • Māori
  • superannuitants.

Our decision was a response to the 2013 CPI Advisory Committee and associated submissions from a public consultation.

The committee, a customer group set up to advise the Government Statistician on the CPI, reconfirmed the CPI’s principal use is to inform monetary policy-setting, and acknowledged that its design is a compromise between this principal use and other uses, such as adjusting a range of public and private payments (Statistics NZ, 2013).

It was in this light that the committee recommended we provide extra indexes to reflect changes in the purchasing power of incomes of particular population subgroups.

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