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Pet-related products in the CPI

In this article, we explain the sources and methods used to compile the pet-related products class of the consumers price index (CPI). This class of the CPI had an expenditure weight of 0.63 percent at the June 2011 quarter.

Position in the CPI structure

The pet-related products class is part of the recreation and culture group.

It includes the following items:

  • pet food, canned (700g)
  • pet food, pelletised (1kg)
  • pet roll (2.6kg)
  • bird seed (500g).

Relative importance of classes

Table 1 outlines the expenditure weights, or relative importance, of the recreation and culture group, the ‘other recreational equipment and supplies’ subgroup, and its classes.

Table 1

Expenditure weight for recreation and culture group and its components
 

Expenditure weight (percent)

Group, subgroup, or class

Level

June 2006

June 2008

June 2011

Recreation and culture

Group

10.21

9.54

9.12

Other recreational equipment and supplies

Subgroup

2.01

2.04

2.07

Games, toys, and hobbies

Class

0.37

0.52

0.50

Equipment for sport, camping, and outdoor recreation

Class

0.47

0.45

0.38

Plants, flowers, and gardening supplies

Class

0.57

0.51

0.56

Pet-related products

Class

0.59

0.56

0.63

The expenditure weight shows the relative importance of spending on particular goods or services. Table 1 shows that in the June 2011 quarter, for every $100 spent by households on goods and services making up the CPI basket, $9.12 was spent on recreation and culture. Of that, households spent $0.63 on pet-related products.

Since the June 2006 quarter, the relative importance of pet-related products has increased slightly, up from 0.59 percent to reach 0.63 percent in the June 2011 quarter.

Expenditure weight estimation

We update the CPI every three years to ensure the expenditure weights allocated to the basket of representative goods and services reflect the relative importance of those that households buy. The three years between updates is well within the International Labour Organisation’s recommendation of at least once every five years.

We last updated expenditure weights during the 2011 CPI review. Information from the 2009/10  Household Economic Survey (HES) was used to determine the relative importance of the pet-related products class of the CPI. The survey collected detailed information on the spending patterns of about 3,100 households.

Item and sample selection for the CPI basket

We review the CPI basket of goods and services once every three years to ensure it continues to reflect household purchases. After the 2011 CPI review, items in the pet-related products class remained unchanged.

Price collection

Prices for all items in the pet-related products class are collected as a part of monthly field price collection. For each of the four pet-related items, we collect prices from about 70 supermarkets in 15 CPI urban areas: Whangarei, Auckland, Hamilton, Tauranga, Rotorua, Napier-Hastings, New Plymouth, Wanganui, Palmerston North, Wellington, Nelson, Christchurch, Timaru, Dunedin, and Invercargill.

Index calculation

We calculate monthly regional average prices for each item in the pet related products class by outlet-weighting the prices collected at different outlets within each region. The monthly average prices are used to calculate quarterly average prices by weighting each monthly average price by the number of days in the month in which it was collected. All quarterly regional average prices are aggregated to obtain the New Zealand quarterly item index. We do this by combining regional average price movements from the price reference quarter (June 2011) to the current quarter, using regional population shares of the national expenditure weight.

Quality assurance

The CPI aims to measure the price change of the same product at each sampled outlet or business over time. In practice, sampled products may become unavailable, change, or become unrepresentative. When this occurs, the quality may change. We make an adjustment so only the estimated 'pure' price change is shown in the CPI. For example, a price increase or decrease that is deemed to be purely the result of better or poorer quality materials or service is adjusted for and the price change is not shown.

In terms of pet food, a common example of quality adjustment is related to a change in pack size. For example, pelletised pet food sold in 1kg bags may come with 10 percent extra due to a promotion run by the distributor. In this case, consumers receive the benefit of an extra 100g of pet food, so we adjust the recorded price downwards to reflect the value of the extra pet food.

Similarly, ‘quantity specials’ are also taken into account. For example, if a can of pet food was $2.00 in February 2014, and three cans  were $4.50 in March 2014 (the single price remained $2.00), then the price per can has decreased from $2.00 to $1.50, so a 25 percent fall in price would be shown. We show such quantity specials when they are considered to be representative of the quantities likely to be purchased by households.

See Accounting for quality change in the CPI for more information.

Back to Price Index News: April 2014

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