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Veterinary services in the CPI

In this article we explain the sources and methods we use to compile the veterinary services class of the consumers price index (CPI).

Position in the CPI structure

The veterinary services class is part of the recreation and culture group. It is the smallest class in the group based on its expenditure weight.

The veterinary services class includes the following services in the CPI basket:

  • veterinary consultation
  • veterinary procedure for cats – spaying
  • veterinary procedure for dogs – vaccination.

Relative importance of classes

The expenditure weight indicates the relative importance of spending on selected goods or services in the CPI. Table 1 shows that, in the June 2011 quarter, for every $100 spent by households on goods and services covered by the CPI, $9.12 was spent on recreation and culture. Of that, consumers spent $0.19 on veterinary services.

Table 1

Expenditure weights for recreation and culture group and its components

Group, subgroup, or class

Level

Expenditure weight (percent)

June 2006 quarter

June 2008 quarter

June 2011 quarter

Recreation and culture

Group

10.21

9.54

9.12

Recreational and cultural services

Subgroup

2.88

2.38

2.54

Recreational and sporting services

Class

1.01

0.95

0.93

Cultural services

Class

1.63

1.20

1.42

Veterinary services

Class

0.24

0.22

0.19

The relative importance of veterinary services fell slightly from 0.24 percent in the June 2006 quarter to 0.19 percent in the June 2011 quarter.

Expenditure weight estimation

We review the CPI every three years. This is to ensure the expenditure weights allocated to the basket of representative goods and services reflect the relative importance of what is bought by households. The time between updates to the basket and determining their relative importance is well within the International Labour Organization’s recommendation of at least once every five years.

We last updated the expenditure weights as part of the 2011 CPI review. We used information from the 2009/10 Household Economic Survey (HES) and other data sources to determine the relative importance of the veterinary services class of the CPI. The 2009/10 HES collected detailed information on the spending patterns of about 3,100 households. This survey was the primary information source for spending on all items in the veterinary services class.

We will review the expenditure weights again during the 2014 CPI review.

Item and sample selection

As part of the 2011 CPI review, we reviewed items in the CPI basket of goods and services to ensure the basket continues to reflect household purchases. The basket of the veterinary services class remained unchanged.

Price collection

We use a quarterly postal survey to collect prices for veterinary services. The prices we collect are for a consultancy fee, the fee for spaying a six-month-old cat, and the fee for an annual adult dog vaccination against distemper, parvo-virus, hepatitis, and kennel cough. We collect prices from about 25 veterinary clinics and hospitals in 15 CPI urban areas: Whangarei, Auckland, Hamilton, Tauranga, Rotorua, Napier-Hastings, New Plymouth, Wanganui, Palmerston North, Wellington, Nelson, Christchurch, Timaru, Dunedin, and Invercargill.

Estimation

For the three items in the veterinary services class, we calculate regional average prices by outlet-weighting the prices collected at different outlets with each region. All regional prices are aggregated to obtain the New Zealand quarterly item index. We do this by combining regional 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 – the price change is not shown.

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

Back to Price Index News: April 2014

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