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Price Index News: April 2012

1. Short stories

Not so cut and dried

Not so cut and dried: 60 years of tracking haircut prices in the CPI looks at the different types of haircuts tracked in the consumers price index (CPI) over the 60 years from 1951 to 2011, and how prices have changed over that time. We also examine how the distribution of the prices we currently collect varies between the three main pricing centres (Auckland, Wellington, and Christchurch) and the 12 other pricing centres.

Not so cut and dried gives a pictorial summary of how haircut prices have changed over the past 60 years.

Beneath the surface: retail fish prices 2006–11

Beneath the surface: retail fish prices 2006–11 tracks the prices of fresh fish sold in supermarkets and fish shops from 2006–11. In 2011, hoki ($14.09/kg) and red cod ($16.26/kg) prices would have appealed to the budget-conscious shopper. Those who bought snapper or blue cod would have had to reach further into their wallets, paying $37.40 and $36.33 per kilogram respectively.

A fresh look at patterns in gadget sales

A fresh look at patterns in gadget sales  was published in the first issue of Statistics New Zealand's new publication Economic News on 4 April 2012. The article looks at spending on eight consumer electronic goods from mid-2008 to mid-2011. Retail transaction data, supplied by the market research company GfK, provides a fresh insight into the spending patterns shown in the Retail Trade Survey. December spending peaks are explained and evolving patterns are revealed.

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2. Working with others

International comparison of prices in the Pacific

New Zealand is one of around 200 countries participating in the World Bank’s 2011 International Comparison Programme(ICP), which follows a similar round of pricing comparisons that took place in 2005. New Zealand also participates in the OECD-Eurostat Purchasing Power Parity (PPP) Programme, which runs on a three-yearly cycle for a smaller number of countries.

Purchasing power parities can be used to compare the gross domestic product of different countries without the differing price levels of those nations influencing the figures.

The collection cycle for the 2011 PPP round is nearly finished. Collection is underway, or about to begin for the last three groups (out of 10). Data for the last group will be sent off to the OECD in August 2012. Final checks have been done on two of the 10 groups.

The OECD will send out the first surveys for the 2014 round in April 2012.

To help with price comparisons within the Pacific region, we are also taking part in the Pacific ICP. This programme involves 21 Pacific Island countries and territories. This is being led by the Australian Bureau of Statistics. Our role has been to help select goods to be priced and contribute to discussions on price collection issues in the Pacific region. We have also been helping the Australian Bureau of Statistics communicate with national statistical agencies of some of the smaller Pacific nations that we have close relationships with.

Our other major contribution will be to act as a link country. This is where we collect prices for the same goods as a Pacific Island nation, so they can be directly compared. As New Zealand can be compared with countries in other regions, this allows the Pacific Island nation to be indirectly compared with countries in other regions.

Price collection for the Pacific ICP has just finished for the first period, and individual countries are busy collating this data. A workshop is being held in April for the countries taking part, to go over the initial data and discuss issues with price collection and processing. There has been a good level of enthusiasm from the agencies involved, and funding from the South Pacific Commission and the World Bank will allow most of the participating countries to attend.

Consumer price indexes to be discussed in Geneva

In May 2012, the United Nations Economic Commission for Europe (UNECE) and the International Labour Organization (ILO) will host a meet in Geneva to discuss consumer price indexes (CPI). The presentations, discussions, and exchange of experiences will focus on methodological and practical aspects of compiling price indexes. The meeting will support the development and implementation of internationally accepted CPI standards and methods.

The preliminary agenda for this year's meeting includes the following topics:

  • house price indexes
  • system of price indexes
    • integrating CPI and international comparison programmes/purchasing power parities
    • multi-purpose CPI
    • classification of individual consumption according to purpose in CPI, purchasing power parities, household budget surveys, and national accounts
    • CPI and the national accounts
    • harmonised CPIs
  • price collection methods
    • scanner data
    • electronic reporting
    • other methods of data collection
  • quality adjustment for services
    • price and volume measurement for services
    • financial services, health, transport, insurance, and telecommunication
  • CPI flash estimates and revisable estimates
  • sources of weighting data.

 

Statistics New Zealand, in collaboration with Statistics Netherlands, is preparing a paper for the meeting. The topic of the paper is the research we are currently undertaking on improved methodologies for constructing price indexes from scanner data. We will present and discuss the results of applying these methods to New Zealand consumer electronics data.

CPI adjustment to benefit rates

The consumers price index (CPI) is used to adjust a range of Work and Income payments, including:

  • New Zealand Superannuation and veteran’s pensions
  • benefits for unemployment, sickness, and domestic purposes
  • student allowances
  • childcare assistance.

 

On 1 April 2012, welfare benefits and student allowances increased 1.77 percent. This increase was based on the percentage change in the CPI 'all groups less cigarettes and tobacco subgroup' from the December 2010 quarter to the December 2011 quarter. New Zealand Superannuation and veteran’s pension rates were further adjusted to keep them at 66 percent of the net average weekly wage – they increased 2.65 percent in total. For more details, see the Ministry of Social Development website.

A 'Benefit indexation table' showing the calculation of the 1.77 percent increase is included in the 'Downloads' section of the Consumers Price Index: December 2011 quarter information release. 

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3. Nuts and bolts

Rail, road, and sea passenger transport services in the CPI

The sources and methods used to compile the rail, road, and sea passenger transport class-level indexes of the consumers price index (CPI) are explained in Rail, road, and sea passenger transport services in the CPI. The passenger transport services subgroup of the CPI had an expenditure weight of 2.92 percent at the June 2011 quarter.

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4. On the horizon

Excise duty increase for cigarettes and tobacco

Each year, the excise duty on cigarettes and tobacco is adjusted by the rate of inflation. The latest update was on 1 January 2012. Excise duty increased 14.49 percent. The increase was based on a 4.49 percent increase in the 'CPI less credit services' index from the September 2010 quarter to the September 2011 quarter. It also included the third of three 10 percent increases, as set out in the Excise and Excise-equivalent Duties Table (Tobacco Products) Amendment Act 2010.

The consumers price index (CPI) for the March 2012 quarter (to be released on 19 April) will show how the excise increase affected retail prices for cigarettes and tobacco. The price change shown in the March 2012 quarter CPI should fully reflect the excise increase, depending on the timing of price rises in stores and the timing of price collection by Statistics NZ staff.

The excise duty is now 44.210 cents per cigarette, up from 38.614 cents per cigarette in 2011.

In the December 2011 quarter, excise duty made up just over two-thirds ($9.65) of a $16.40 packet of cigarettes (before GST).

 Excise duty increase for cigarettes and tobacco

Date

Excise Duty
(cents per cigarette)

Increase
(percent)

 1 Jan 2009

 30.955

 

 1 Jan 2010

 31.443

 1.58

 29 Apr 2010

 34.587

 10.00

 1 Jan 2011

 38.614

 11.64

 1 Jan 2012

 44.210

 14.49

Note: on 29 April 2010, excise duty on cigarettes rose 10 percent, while excise on tobacco rose 25.4 percent (the result of tobacco first increasing by 14 percent and then by another 10 percent).

Cigarette and tobacco prices increased 26 percent from the March 2010 quarter to the December 2011 quarter. This includes excise duty increases in April 2010 and January 2011, as well as the rise in GST in October 2010 (when GST rose to 15 percent).

Increase in Earthquake Commission levies

Insurance companies add Earthquake Commission (EQC) levies to the personal home and contents insurance premiums they charge. The levy funds the cover that the Earthquake Commission provides in the event of certain natural disasters.

In October 2011, the Government announced that the levy would increase from 1 February 2012. The increase will help to rebuild the EQC’s natural disaster fund following the Canterbury earthquakes.

In February, the EQC levy on personal home and/or contents insurance increased from 5 cents to 15 cents per $100 of insurance cover. The maximum total levy that an insurance policy holder now pays per residence is $150 for home insurance policies and $30 for contents insurance policies, excluding GST. These are rises from $50 and $10, respectively. For customers with home and contents insurance policies, the maximum levy increased from $69 to $207 per year, including GST.

All of the impact of the increased EQC levy for home and contents insurance policies will be shown in the March 2012 quarter CPI.

Education fees in the CPI

In the March quarter CPI of each year, which coincides with the start of the academic year, we show price changes in:

  • tertiary education fees
  • adult and community education fees 
  • school fees, donations, and uniform prices.

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5. Development updates

Reviewing the business price indexes

Statistics New Zealand has started a rolling review of the business price indexes – the producers price index, the farm expenses price index, and the capital goods price index. The review has two objectives: to review these indexes to ensure they remain relevant and to collect commodity data for use in the national accounts.

In September 2011, the Minister of Statistics approved a commodity data collection survey. This survey will collect information on the supply and use of goods and services (commodities) by economically significant enterprises operating in New Zealand. We will use this information to balance 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.

This commodity information by industry will also be used to establish lower-level weights for the business price indexes, which are used as deflators in producing a chain-volume measure of GDP.

We carried out the last redevelopment of the producers price index from 2004 to 2010. The new rolling review is the first to use the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06). As part of the rolling review, we are prioritising the ANZSIC06 industries. We are reviewing most of the industries on six-year cycles, and the remaining industries on either three-year or 12-year cycles.

Industries currently being reviewed are:

  • primary metal and metal product manufacturing
  • fabricated metal product manufacturing
  • printing
  • publishing
  • agriculture (including the farm expenses price index)
  • electricity, gas, and water
  • 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.

 

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

Peter Campion
Wellington 04 931 4600
Email: info@stats.govt.nz

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6. Making contact

Call for feedback on the redevelopment of the farm expenses price index

As part of our rolling review of the business price indexes, we are reviewing the farm expenses price index (FEPI) and the input indexes of the agriculture industry in the producers price index (PPI), to ensure they remain relevant and meet your needs.

We would like your feedback on the industry and input types included in the FEPI, and on the industry indexes of the agricultural inputs in the PPI.

The FEPI and PPI measure the prices that farmers and producers pay for goods and services (FEPI and PPI inputs), and the prices farmers and producers receive for the goods and services they sell (PPI outputs). Within the agricultural industry, we measure price changes for four published industry types. In the FEPI, the inputs into the farming industry are split into 18 different input types. 

FEPI and PPI industry types

We are reviewing some of the industry types used in FEPI and PPI (inputs). These are:

  • horticulture and fruit growing
  • sheep and beef cattle farming
  • dairy cattle farming
  • cropping and other farming.

 

One option is to change the industry types to align with the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06) for agricultural industries used for the PPI outputs. The ANZSIC06 industry types are:

  • horticulture and fruit growing 
  • sheep, beef cattle, and grain farming 
  • dairy cattle farming 
  • poultry, deer, and other livestock farming.

 

In the first list of industry types above, ‘grain farming’ is included in ‘cropping and other farming’, while in the second ‘grain farming’ is included in ‘sheep, beef cattle, and grain farming’.

Using the first list of industry types would mean that the index for sheep and beef cattle farming would not be affected by changes in the price of grain farming inputs. Using the second list would mean that the input and output farm types in the PPI would be the same. This would mean changes in the price of inputs and outputs could be directly compared for each industry type.

FEPI input types

We are reviewing the input types used in the FEPI. Listed below are the current FEPI input types:

  • administration 
  • animal health and breeding  
  • dairy shed expenses  
  • electricity  
  • feed, grazing, cultivation, and harvesting  
  • fertiliser, lime, and seeds  
  • freight  
  • fuel  
  • insurance premiums 
  • rent and hire  
  • repairs, maintenance, and motor vehicle repairs  
  • packaging costs  
  • shearing  
  • weed and pest control   
  • livestock purchases  
  • local and central government rates and fees  
  • interest rates  
  • wages and salaries.

 

A possible option is to further divide or aggregate some of the input types listed above. We welcome your feedback. 

See Producers Price Index: March 2011 quarter for the most recent FEPI tables.

To provide feedback, please contact:

Erica van Essen
Wellington 04 931 4600
Email: info@stats.govt.nz

Contact people

If you would like to discuss any aspect of price index statistics, we would like to hear from you. Use the contact details at the end of the Commentary section in each of our information releases. You can also contact:

Chris Pike (Manager – Prices)
Litia Tapu (Project manager – Business, labour, and overseas trade price index outputs)
Sarah Williams (Project manager – Consumers price index outputs)
Peter Campion (Project manager – Index development).

Wellington 04 931 4600
Email: info@stats.govt.nz

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7. Release dates

Price index release calendar for the next three months

M= Media conference


April 2012

Mon 16 Food Price Index: March 2012
Thu 19 Consumers Price Index: March 2012 quarter


May 2012

Tue 1 M Labour Cost Index (Salary and Wage Rates): March 2012 quarter
Fri 11   Food Price Index: April 2012
Thu 17 M Producers Price Index: March 2012 quarter
Thu 17 M Capital Goods Price Index: March 2012 quarter
Thu 17    Farm Expenses Price Index: March 2012 quarter – tables 


June 2012

Fri 1 M Overseas Trade Indexes (Prices): March 2012 quarter (provisional)
Fri 1 M Overseas Trade Indexes (Volumes): March 2012 quarter (provisional)
Thu 14 Food Price Index: May 2012

Published 11 April 2012.

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