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Price Index News: October 2017

1. Working with others

Used cars update

By working across government we’ve made improvements to estimating price change for used cars – to make better use of available data. We now work with the New Zealand Transport Agency (NZTA) to gather information on the characteristics of used cars sold in New Zealand. This lets us produce better quality data more efficiently and at a lower cost for businesses in our survey.

We survey the prices and registration numbers of used cars sold to consumers from a sample of used car dealers. Using the registration numbers, NZTA provides Stats NZ with information on the cars, such as odometer reading and engine size, from the Motor Vehicle Register (MVR). Making this change simplifies the survey as we no longer require respondents to provide this information.

Using the NZTA information on vehicle characteristics, we can estimate the changes in price, while controlling for changes in the quality of cars sold, using hedonic regression methods developed in 2001, and improved in 2011.

By using the MVR information we can expand the coverage of our used car prices to include sports utility vehicles (SUV), and hybrid and electric cars, as well as include more characteristics. Including SUVs represents a significant quality improvement, while including hybrid and electric vehicles will keep our method robust as consumer preferences evolve.We’ve also optimised the sample size for used cars from 300 to 30. This significant reduction reflects: efficiency gains from the hedonic regression models, discontinuing regional estimates for used car prices, and requiring key firms to respond.  

2. On the horizon

Alcohol excise duty increases

The annual indexation adjustment of excise duty on alcoholic drinks occurred on 1 July 2017. The adjustment was a 2.16 percent increase in the excise duty, based on a 2.2 percent increase in the 'CPI less credit services' index from the March 2016 quarter to the March 2017 quarter, published on 20 April 2017.

We expect the effect on retail prices to show fully in the September 2017 quarter’s CPI, but this depends on the timing of price increases in pubs, clubs, restaurants, and liquor stores, and when we collected the prices.

Local authority rates

We carry out the CPI Local Authority Rates Survey each year in the September quarter, for a sample of territorial authorities and regional councils. Rates are surveyed once a year because local authorities usually set them annually.

While newly set rates all take effect from 1 July, not all territorial authorities and regional councils set them in the September quarter. However, for the past five years, we’ve included 80 to 92 percent of the weight in the sample of local authority rates in the September quarter’s CPI. The small number of rates set after the September quarter, combined with the timing of survey returns and processing, result in us showing rate changes in both the September and December quarter CPIs.

For the September 2017 CPI quarter, published in October 2017, we’ll include 98 percent of the weight of the local authority rates sample.

3. Making contact

Living-costs app

Living-costs explorer is our new interactive data visualisation of the household living-costs price indexes (HLPIs). The app is on our Innovation site.

The household living-costs price indexes (HLPIs) look at the inflation experienced by 13 different groups, including beneficiaries, Māori, superannuitants, and other groups of people who have varying income and spending patterns.

Stats NZ is often told that consumers price index inflation (CPI) does not reflect people's own experience of inflation. The new household living-costs price indexes are different from CPI. They aim to be more meaningful to individual households as they reflect the typical expenditure patterns of different groups in our society.

The HLPIs are different from the overall 'basket' of inflation that the CPI measures. The CPI measures price changes that New Zealand households overall experience. The CPI is a national average, so it does not reflect price changes seen by different groups in society. The HLPIs also include mortgage-interest payments in place of the construction of newly built houses.

How the app works

You can explore the series for different household groups and at different levels of the New Zealand Household Expenditure Classification – try investigating demographic facts, such as home-ownership rates.

You can also download the charts in .pdf and .png formats. The data behind each chart can be downloaded in .csv format. If you’re data hungry, all the expenditure, inflation, and facts data can be downloaded in bulk.

Household living-costs price indexes: Background will help you better understand the design of these series.

Tell us what you think

This app is very young – we’d love to get your feedback to help make it better.

  • Let us know what you think about the layout and usability.
  • What extra options would you like to see?
  • Would it be useful to have more apps like this for other series? 

A feedback form is available with the app or you can contact:

Alan Bentley
04 931 4600 or 0508 525 525
Email info@stats.govt.nz

4. Development update

Consumers price index review

In the July edition of PIN, we mentioned the upcoming review of the CPI and FPI. The review involves a three-yearly reweight and reselection of the CPI and FPI baskets of goods and services. This review will also reset the CPI to a base period of June 2017 = 1,000 (the current base is June 2006 = 1,000).

We review the CPI regularly to ensure the indexes remain accurate and relevant by fairly representing what New Zealand consumers buy.

Key dates

20 November 2017 – to accommodate the review work, we’ll be releasing the October FPI results on this date – one week later than usual. At the same time, we’ll publish a paper that highlights features of the review that relate to the food group.

30 November 2017 – we’ll publish a back-series of rebased index numbers for all CPI and FPI series, to allow you to make the necessary changes to your models. The back-series will be in CSV format.

12 January 2018 – we’ll release a paper highlighting features of the review.

25 January 2018 – normally we would release the CPI review as part of the September quarter’s CPI in October. However, due to a delay in starting the review, caused by the November 2016 earthquake, we’ll publish the review as part of the December 2017 quarter CPI release in January. This release will incorporate all changes resulting from the review (ie reweight, CPI basket-item reselection, and rebase to June 2017 = 1,000). (Note: On 6 October 2017 this release date was incorrectly published as 23 January 2018.)

15 February 2018 – the final part of the review will be our household living-costs price indexes (HLPIs) for the December 2017 quarter. 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). That day we’ll also publish a paper that highlights features of the review as they affect the HLPIs.

Other information

  • It is usual practice to place the re-based index numbers under the existing TSM identifier codes, and move the old series to sit under new TSM identifier codes. We anticipate following the same practice for this re-base.
  • The CPI percentage movements released before the new base period will not change. We’ll achieve this by rescaling the previously published movements, using a ratio of the new index number to the new index number base on the old expression.

Please email CPIReview@stats.govt.nz if you would like to receive a link to the CSV file with the CPI back-series, which will be available on Stats NZ’s website from 10:45am on 30 November 2017.

Web scraping

In recent months the Prices team has been exploring new methods of data collection – by web scraping. Web scraping uses computer programs to download a website’s contents and extract the relevant information into a usable dataset.

Over the last few months we have been comparing our web-scraped results with our current online collections and survey data. This comparison has yielded good results, and holds promise for future expansion of this method.

The December 2017 quarter’s CPI will be the first in which we’ll directly substitute part of our monthly and quarterly online collection with this new web-scraped data.

As we replace online collection, or surveyed data, with web-scraped data we will decrease respondent burden and increase efficiency. Expanding web scraping also opens up the possibility of increasing the frequency and scope of price collection, which would lead to quality improvements and timeliness gains.

5. Release dates

Price index release calendar for the next three months

October 2017

12 October:            Food Price Index: September 2017

17 October:            Consumers Price Index: September 2017 quarter

27 October:            Household Living-costs Price Indexes: September 2017 quarter

November 2017

1 November:          Labour Market Statistics: September 2017 quarter

17 November:        Business Price Indexes: September 2017 quarter

20 November:        Food Price Index: October 2017

December 2017

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

13 December:      Food Price Index: November 2017

This issue of Price Index News was published on 6 October 2017.

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