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Price Index News: January 2018

1.  On the horizon

Home and contents insurance EQC levy increases

During the December 2017 quarter, the New Zealand Earthquake Commission (EQC) increased the levy paid to the Natural Disaster Fund on home and contents insurance premiums. The levy rose from 15 cents per $100 of cover, to 20 cents per $100 of cover, at 1 November 2017.

As a result, consumers who renewed their home and contents insurance policies during the December 2017 quarter experienced large price increases in their premiums, the magnitude of which depends on the valued-insured-to-premium ratio of their policies.

As consumers renew their insurance policies on an annual basis, this price increase will be spread over four quarters.

2.  Virtual papers

Presenting at the New Zealand Statistics Association conference

Prices analysts Alan Bentley, Matthew Stansfield, and Sam Olivecrona attended the annual NZSA Conference, hosted by the Department of Statistics at the University of Auckland in December 2017. At the conference we presented on three topics.

Towards a big data CPI for New Zealand (submission number 205), presented by Alan Bentley. Alan discussed the drivers for changing CPI collections and methods and the benefits of a big data approach, reflecting on our early adoption of model-based approaches to price measurement. For example, how we’re using a hedonic model for second-hand cars, and using retail transactions (scanner data) for consumer electronics products (including TVs, computers, and digital cameras) in our CPI.

The potential of web scraping in price collection (submission number 207), presented by Matthew Stansfield and Sam Olivecrona. Matt and Sam demonstrated a basic technique of web scraping through the programming language R. They discussed some challenges and limitations of web scraping more sophisticated websites, and of using web-scraped data in producing official price indexes.

Investigating methods to produce price indexes from big data (submission number 206), presented by Matthew Stansfield, Alan Bentley, and Sam Olivecrona. The authors discussed our latest findings on a promising method to use big data for enhancing and improving our current data collections and price measurement. In this method we employ a fixed-effects regression approach that includes using the fixed effects window splice (FEWS) technique to produce unrevised price indexes at near real time.

Use the links above for more information. Use ‘Index by submission number’ on the left of the page to search for these papers.

3.  Development updates

Update on the CPI review

On 12 January we released an information paper highlighting features of the 2017 Review of the Consumers Price Index (CPI). The release included a set of tables with the new expenditure weights for the CPI basket.

If you’re using the new weights to update your models, please remember the monthly food weights do not sum to the quarterly food weights, due to differences in price updating.

Price updating takes expenditure data from the Household Economic Survey (and other sources used for the CPI) and updates the prices to the relevant reference period. The new reference period for the CPI is the September 2017 quarter (ie a weighted average of prices collected in July, August, and September 2017); for the FPI the reference period is the September month (ie a weighted average of prices collected in September 2017).

Price updating also flows on to update the expenditure values, which means the corresponding expenditure weight is also updated. For example, if prices for an item drop over a quarter, then the weight for that item will also decrease.

The next major milestone for the review will be release of the December 2017 quarter CPI on 25 January 2018. This release will incorporate all changes resulting from the review (ie reweight, reselection of the CPI basket, and rebase to June 2017 = 1,000).

The final part of the review will be the release of the household living-costs price indexes (HLPIs) on 15 February 2018. This release will include a reweight and basket reselection for the HLPIs, but not a rebase (as the current base is June 2014 = 1,000). We’ll also release an information paper on 15 February that highlights features of the review as they affect the HLPIs.

4. Release dates

Price index release calendar for the next three months

January 2018

25 January:             Consumers Price Index: December 2017 quarter

February 2018

7 February:             Labour Market Statistics: December 2017 quarter

14 February:           Food Price Index: January 2018

15 February:           Household Living-costs Price Indexes: December 2017 quarter

20 February:           Business Price Indexes: December 2017 quarter

March 2018

1 March:                Overseas Trade Indexes (Prices and Volumes): December 2017 quarter (provisional)

13 March:              Food Price Index: February 2018

This issue of Price Index News was published on 16 January 2018.

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