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Price Index News: January 2016

1.  Short stories

Beef prices reach their highest levels

In Beef prices reach their highest levels we look at the recently high domestic and export prices for beef.

2.  Working with others

Household living-costs price indexes – thanks for your views

We are developing a new suite of price indexes – the household living-costs price indexes (HLPIs). They will highlight differences in household expenditure patterns and provide greater insight into the inflation experiences for groups of households. We are developing the HLPIs in response to the 2013 CPI Advisory Committee’s recommendation, and associated submissions from public consultation early in 2014.

We thank everyone who gave us their views on the HLPIs.

The groups of households we’ll cover are:

  • beneficiaries
  • income quintiles (five groups)
  • Māori
  • superannuitants.

Regular production of the indexes is due to start in mid-2016.

We undertook public consultation about how to construct the HLPIs in October and November 2015. This included a workshop in Wellington on 19 November 2015.

The submissions we received will inform our decisions on the final design and development of the HLPIs.

For further information, please contact:
Alan Bentley or Katrina Dewbery
Wellington 04 931 4600
Email HLPI@stats.govt.nz

3.  On the horizon

10-year passports in the CPI

Effective 30 November 2015, 10-year passports are now available to New Zealand citizens over the age of 16.

Previously, the price of 5-year adult passports ranged between $140 and $293.30 (standard service being the cheapest and urgent the most expensive). With the implementation of the 10-year passports, prices now range between $180 and $360.

In the CPI, we will show this change as a price decrease as the price per year has fallen. The price change from a 5-year passport to 10-year passport will be partly shown in the December 2015 quarter release of the CPI, with the rest shown in the March 2016 quarter.

Passports for children will remain valid for five years, but the price has gone up from $81.70 to $105 for standard service and from $235 to $285 for urgent service.

Passport charges are included in the ‘other miscellaneous services not elsewhere classified’ class in the CPI and comprised about a quarter of the weight of this class. The ‘other miscellaneous services not elsewhere classified’ class represented 0.42 percent of the total weight of the CPI at the June 2014 quarter.

Summer seasonal goods

Summer seasonal goods in the CPI basket include summer clothing, footwear, and sports equipment. We price these goods only in December quarters because they have a limited supply and demand in other quarters. We show changes in summer seasonal prices fully in December quarters – and show no change in other quarters.

We also collect and show price changes for some outdoor-living equipment prices, such as those for barbecues, in March quarters.

Local authority rates in the CPI

We carry out the Local Authority Rates Survey for the CPI 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 their rates annually.

While newly set rates take effect from 1 July, not all territorial authorities and regional councils set rates during the September quarter. The small number of rates set after the September quarter, combined with the timing of survey returns and processing, result in us showing rating changes in both the September and December quarter CPIs.

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 CPI. In 2015, we showed 91 percent of the weight in the September quarter. We are including the remaining 9 percent of the weight in the December 2015 quarter, to be published on 20 January 2016.

4.  Development updates

Annual update of producers price index weights

We update the producers price index (PPI) industry and commodity weights annually to help maintain the relevance of this index. The weights come from the supply and use tables (SUT) we produce each year as part of the New Zealand System of National Accounts. The updates reflect changes in economy-wide income and expenditure, in particular the mix of products and the mix of industries. We re-weight the industries at the New Zealand Standard Industry Output Categories level 4 and above (there are 118 level 4 industries).

See New Zealand Standard Output Categories classification tables for details.

We introduced the latest weights in the PPI tables for the March 2015 quarter business price indexes release, based on the 2011/12 SUT. These weights were first used to weight price movements from the December 2014 quarter to the March 2015 quarter. We are also updating the lower-level commodity indexes and product samples. This work is part of our review of the business price indexes.

We use the PPIs as deflators in calculating gross domestic product, which is New Zealand’s official measure of economic growth. These deflators remove the effect of price change so we can measure change in the volume of goods and services produced in the economy. The PPIs are also used as an inflation measure and in contract indexation; for example, to reflect changes in prices during the life of a commercial project so all parties have agreed procedures for adjusting originally contracted prices.

Reviewing the business price indexes

We are continuing our rolling review of the business price indexes (BPI) – the producers price index (PPI), the farm expenses price index, and the capital goods price index. The review has two objectives: to maintain the relevance of these indexes and to collect commodity data for use in the national accounts.

We survey a sample of economically significant enterprises operating in New Zealand to collect information on their supply and use of goods and services (commodities). We use information from the commodity data collection to balance the 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. We also use this commodity information (by industry) to update lower-level weights for the business price indexes. These are used as deflators in producing a chain-volume measure of GDP.

We carried out the previous PPI redevelopment from 2004 to 2010. The current rolling review is the first to use the Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06). As part of the review, we prioritised the ANZSIC06 industries, and are reviewing them on eight-year cycles for most industries, and on four or 12-year cycles for those remaining.

At present, we are reviewing these industries:

  • fishing
  • meat and meat product manufacturing
  • seafood processing
  • dairy product manufacturing
  • fruit, oil, cereal, and other food product manufacturing
  • beverage product manufacturing
  • building construction
  • mining.

We have completed reviews and also implemented lower-level PPI commodity weights and updated product samples for the following industries.

Implemented in the March 2013 quarter:

  • printing and publishing.

Implemented in the June 2013 quarter:

  • primary metal and metal product manufacturing
  • fabricated metal product manufacturing
  • electricity, gas, and water.

Implemented in the March 2014 quarter:

  • farm expenses price index.

Implemented in the June 2014 quarter:

  • forestry and logging
  • aquaculture
  • hunting and trapping
  • agriculture, forestry, and fishing support services
  • tobacco product manufacturing
  • petroleum and coal product manufacturing
  • basic chemical and basic polymer manufacturing
  • fertiliser and pesticide manufacturing
  • pharmaceutical, cleaning, and other chemical manufacturing
  • transport equipment manufacturing
  • electronic and electrical equipment manufacturing
  • machinery manufacturing
  • rail, water, air, scenic and sightseeing transport.

Implemented in the September 2014 quarter:

  • agriculture.

To be implemented in the December 2015 quarter:

  • meat and meat product manufacturing
  • dairy product manufacturing
  • fruit, oil, cereal, and other food product manufacturing
  • beverage product manufacturing
  • building construction.

All other industries we are currently reviewing will have lower-level PPI commodity weights and updated product samples implemented after the December 2015 quarter. We will publish an updated list of these industries in Price Index News.

For more information about the rolling BPI review, please contact:
James Griffin
Wellington 04 931 4600 or 0508 525 525
Email: info@stats.govt.nz

CPI rolling review 2015/16

As part of our work to ensure the CPI remains relevant and up-to-date we undertake rolling reviews between our three-yearly updates of the CPI basket and weights.

We are currently reviewing our postal survey collections to ensure prices are collected efficiently and continue to be relevant. This will ensure the collections meet the needs of our customers, stakeholders, and suppliers in the best way. We are engaging with key stakeholders and suppliers to review our existing methods for collecting electricity and childcare information.

For more information on this CPI rolling review for 2015/16 contact:
Katrina Dewbery or Alan Bentley
Wellington 04 931 4600 or 0508 525 525
Email: info@stats.govt.nz

Labour cost index review completed

We recently completed the labour cost index (LCI) review when we reweighted the non-wage labour costs component of the index (eg the costs for annual leave and superannuation). This was implemented in the Labour Cost Index (All Labour Costs): June 2015 quarter.

The LCI weights for salary and wage rates were updated and implemented in Labour Cost Index (Salary and Wage Rates): September 2014 quarter.

We carried out the review to update the weights of the LCI, which measures changes in wage rates and non-wage labour costs, so they reflect the changes in the industry and occupation structures of the labour market.

The main data sources we used were the 2013 Census, the Business Register of New Zealand businesses, the Labour Cost Survey, the Quarterly Employment Survey, and linked employer-employee data.

See Reweighting the LCI salary and wage rates and Reweighting the LCI non-wage for details about the methods we used to compile the new weights.

The LCI review was based on the existing industry and occupation groups – the New Zealand Standard Industrial Output Categories and the Australian and New Zealand Standard Classification of Occupations, respectively.

Consultation

As part of the review, we consulted LCI customers and stakeholders and sought public feedback so we could better understand the value they obtain from the non-wage components of the LCI. This was to ensure that the statistics we provide continue to remain relevant to customers.

See Public consultation on proposal to discontinue labour cost index non-wage statistics for details about the consultation.

As a result of the consultation we have decided to stop the LCI non-wage and all labour costs. We will investigate the development of a set of non-wage labour cost indicators based on administrative data sources. The June 2015 quarter data was the last survey-based release. The new indicators are likely to be available from October 2016.

We’ll continue to publish the LCI salary and wage rates each quarter. Their relevance will be maintained by reviewing the weights following the 2018 Census. 

5.  Release dates

Price index release calendar for the next three months 

January 2016

Fri 15 Jan                    Food Price Index: December 2015

Wed 20 Jan       M      Consumers Price Index: December 2015 quarter

February 2016

Wed 3 Feb         M      Labour Market Statistics: December 2015 quarter

Fri 12 Feb                    Food Price Index: January 2016

Thu 18 Feb                  Business Price Indexes: December 2015 quarter

March 2016

Tue 1 Mar                  Overseas Trade Indexes (Prices and Volumes): December 2015 quarter (provisional)

Fri 11 Mar                  Food Price Index: February 2016

M = Media conference

This issue of Price Index News was released on Friday, 15 January 2016

 

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