Consumers Price Index: September 2014 quarter

CPI review implemented

Changes from our latest CPI review have been implemented in this release. The review reselected the basket of goods and services, and updated their relative importance. The CPI is reviewed every three years to ensure it maintains its relevance.

We also reduced the number of regional centres that CPI prices are collected from – down from 15 to 12. This was to re-invest the cost of collection towards funding CPI-related initiatives such as household living-costs price indexes for particular groups in society and seasonally adjusted analytical CPI series, as recommended by the 2013 CPI Advisory Committee.

Big data for consumer electronics price movements

From the September 2014 quarter, we are using retail transaction data (or 'scanner data'), supplied by market research company GfK, to estimate the price movements of 12 consumer electronics categories in the CPI. The categories we are tracking this way are:

• heat pumps
• desktop computers
• laptop computers
• tablet computers
• multi-function devices
• cellphone handsets
• digital cameras
• digital camera memory cards
• television sets
• set-top boxes for television sets
• DVD, Blu-ray players and player/recorders
• home theatre and stereo systems.

Rather than collecting prices for a sample of consumer electronic products at about 60 outlets in the middle of each quarter, scanner data lets us track the prices and quantities of all products sold during a period of time. The data being supplied includes hundreds of thousands of transactions each month.

We have collaborated with Statistics Netherlands on a method to measure price change with this type of data. Our joint paper Scanner data and the treatment of quality change in nonrevisable price indexes on the method was recently published in the Journal of Business & Economic Statistics. This method incorporates the price-determining features of products in statistical models to ensure their changing quality is removed from the measurement of price change.

We will soon publish more details on the methodology, and its practical application in the CPI, in a 'sources and methods' document. This paper will also be included in the next issue of Price Index News.

New Zealand is the first country in the world to make such comprehensive use of scanner data for measuring price change for consumer electronics items in a CPI.