Data Collection
CPI Data Collection 2017
Methodology
Field collection
Statistics NZ price collectors gather prices directly from retail outlets.
Sample size
We collected about 100,000 prices from about 2,800 retail outlets and 2,300 other businesses and landlords.
General information
Imputation
Due to unavailability at the time of price collection, on average we impute 1–2 percent of prices (not including seasonal items such as winter clothing) each quarter. We often do this by carrying forward the previous quarter’s price. Other imputation we do is to apply the movements of similar categories of items.
Review of the CPI
Reviews of the CPI are undertaken every three years. We implemented the latest review when the December 2017 CPI was published. Reviews are generally implemented in September quarter’s, however, the 2020 review was delayed a quarter due to the impact of the 2016 Kaikoura earthquake on the work programme. The review involved reselecting the basket of representative goods and services, updating the new national expenditure weights, and updating regional expenditure weights and re-setting the CPI indexes to a base period of June quarter 2017 = 1000. (Previous series were published on a base of the June quarter 2006 = 1000.)
Consumers price index review: 2017 (revised) provides more details about the review.
Reference population
The reference population of the CPI covers approximately 98 percent of the usually-resident New Zealand population living in permanent dwellings.
Expenditure weights
Expenditure weights give the relative importance of the goods and services in the CPI basket.
We update expenditure weights every three years as part of regular CPI reviews. The current set of weights are derived from the 2015/16 Household Economic Survey (HES) and other sources.
CPI weights are based on household spending for the year to September 2017 (the ‘weight reference period’), expressed in September 2017 quarter prices (the ‘price reference period’).
The relative importance of the CPI groups shows that $24.47 of every $100 households spend on goods and services in the CPI is spent on housing and household utilities, $19.29 is spent on food, and $13.94 is spent on transport.
Collection methods
We collect prices used in the CPI through three main methods: visiting retail outlets, postal surveys, and the internet.
Our price collectors personally visit over 2,800 different shops in 12 pricing centres throughout the country: Whangarei, Auckland, Hamilton, Tauranga, Napier-Hastings, New Plymouth, Palmerston North, Wellington, Nelson, Christchurch, Dunedin, and Invercargill.
We also send out about 70 different postal surveys each month, quarter, or year. These surveys are used primarily to collect prices for services, such as electricity and bus fares. The surveys are sent directly to service providers. In some cases, for sampling and collection reasons, we aggregate these prices to the national level or to broad regions such as Auckland, Wellington, Canterbury, rest of North Island, and rest of South Island. Items where we use movements in the broad regions include: the purchase of second-hand cars; purchase of new housing; and rentals for housing. In these cases, we use price movements for the five broad regions for the corresponding 12 pricing centres.
The types of outlets visited include supermarkets, department stores, and appliance stores. We collect prices weekly for motor fuels and for fresh fruit and vegetables; monthly for food, non-food groceries, alcoholic beverages, and newspapers; and quarterly for other goods and services.
We sent postal surveys to service providers who set prices nationally or with little variation according to location, such as prices for telephone homeline rental.
Prices for products and services (such as digital downloads, package holidays, and air fares) are also collected each month or quarter from the internet.
Pricing frequency
Whether we collect prices weekly, monthly, quarterly, or annually, depends on the expected frequency of price changes the goods or service exhibit.
Accuracy of the data
Elementary aggregate formula
Average prices in the CPI are called elementary aggregates. These elementary aggregates are the first level of the index aggregation. We calculate regional elementary aggregates for each of the 12 pricing centres where price collection supports regional estimation. In other cases, we calculate regional elementary aggregates for five CPI broad regions (Auckland, Wellington, rest of North Island, Canterbury, rest of South Island) or, where prices do not support regional estimation, directly to a national elementary aggregate. Since the 2006 review of the CPI, we have used the geometric mean, or Jevons, formula to calculate the elementary aggregate indexes for items where outlet substitution is possible (eg for groceries and appliances).
The geometric mean (or Jevons) formula is used to calculate elementary aggregate indexes for goods and services that are considered to be subject to outlet substitution. The Jevons formula, which is recommended by the International Labour Office (ILO), implicitly assumes that consumers increasingly favour outlets showing lower relative price change, whereas the formula used up to this point, the ratio of arithmetic mean prices (or Dutot), assumes that consumers do not substitute between outlets.
The Dutot formula ('ratio of arithmetic mean prices') is used for items where:
• Outlet substitution is not possible (eg local authority rates);
• Prices are subsidised and may fall to zero (eg GPs' fees);
• Fresh fruit and vegetables (as the first stage of aggregation is across both outlets within each region, and across weeks within each month); and
• It is not currently practical to adopt the Jevons formula (eg when prices are aggregated directly to a national elementary aggregate, rather than aggregated to a regional level).
Method of aggregating monthly collected prices from monthly to quarterly level
Prices are collected monthly for the food group and a number of non-food items in the CPI, including electricity, cigarettes and tobacco, alcoholic drinks, and air travel. To include them in the CPI, we average these prices over the quarter.
The method we use to calculate these averages is to obtain monthly regional average prices for the item – by outlet-weighting the prices collected at different outlets within each region. We use the monthly regional average prices to calculate quarterly regional average prices – by weighting each monthly regional average price by the number of days in the month in which it was collected. This is called day weighting. We aggregate all the regions to obtain the national quarterly index by weighting together regional price movements from the base quarter to the current quarter, using the regional expenditure weights.
We collect petrol and diesel prices weekly, usually on Fridays. The CPI petrol price index measures price changes of 91 octane petrol and 95/98 octane petrol. Within each CPI region, we calculate an average price per 10 litres of each fuel from the prices surveyed each week at individual service stations. Monthly regional average prices for each fuel are then calculated as simple averages of the averages for the weeks in each month. We calculate quarterly regional average prices for each fuel as the day-weighted averages of the averages for the three months in the quarter. We then weight regional price movements from the base (ie September 2017) quarter to the current quarter by the regional population-weighted share of the national expenditure weight, to calculate the national petrol and diesel price indexes for the current quarter.
Since we collect petrol and diesel prices either 12 or 13 times within each quarter, a price change during the quarter is only partly reflected in that quarter, with the remainder being reflected in the following quarter. This also occurs for commodities that are priced monthly, such as cigarettes and tobacco.
Outlet weights
We give outlets appropriate weights to reflect their relative importance in terms of household spending.
'On special' prices
We include items that are 'on special' in the CPI at the price levels we observe when collecting prices. Quantity specials (eg 15-pack of beer at a cheaper shelf price than the 12-pack) are also considered where appropriate (as the price per bottle for the special is lower).
Key concepts
Standard and non-standard series
CPI series that contribute to the hierarchical structure of the overall CPI are known as standard series. For example, the clothing index, combined with the footwear index, contributes to the clothing and footwear index, which in turn contributes to the all groups index. Components of this pyramid-like structure are known as standard index series. In addition, we publish a selection of non-standard series in the information release tables; additional series are available from Infoshare. Examples of these non-standard series include:
– all groups CPI less each of the 11 CPI groups
– all groups CPI plus interest
– interest.
The CPI is published at the following levels: group, subgroup, and class – all at the national level. We also publish selected sections within the food group.
Tradable and non-tradable non-standard series
The tradable and non-tradable component series that appear in table 1 allow users to decompose CPI goods and services into two components: one contains goods and services that are imported or in competition with foreign goods, either in domestic or foreign markets tradables); the other contains goods and services that do not face foreign competition (non-tradables).
Movements in the tradables component (tradable inflation) demonstrate how international price movements and exchange rates are affecting consumer prices. The non-tradables component shows how domestic demand and supply conditions are affecting consumer prices.
The September 2017 quarter expenditure weight of the tradables component is 42.46 percent, compared with 43.59 percent in 2014. The September 2017 quarter weight of non-tradables is 57.54 percent, compared with 56.41 percent in 2014.
Consumers price index review: 2017 – Tables (table 6) has the September 2017 quarter tradable/non-tradable weights for each group, subgroup, and class.
Consumers price index tradable and non-tradable series (published 2004) presents the methodology we use to categorise the tradable and non-tradable series.
Trend measures of price-level change
Over the long term, the CPI captures the broad pattern of price change, but it can be influenced by one-off events when analysing price change over shorter timeframes (eg a supply disturbance affecting petrol prices). To remove such influences, we calculate analytical measures of price change in an attempt to isolate the more persistent – or underlying – component of general price-level changes. We construct several analytical measures to give a good guide to underlying price-level change. These are a range of 'trimmed means' and a range of 'weighted percentiles', including a weighted median. See tables 11 and 12 of this release for trimmed means and weighted percentiles.
Trimmed means exclude the influence of the largest increases and decreases in the CPI. We do this at the item level of about 700 goods and services in the CPI basket (eg 91 octane petrol or strawberries). The trimmed means progressively remove the influence of the largest increases and decreases.
Weighted percentiles order price change, during the reference period, from lowest to highest, then show the price change at various percentile points (10th, 25th, 50th/median, 75th and 90th) along this distribution.
Trend measures of price level change (published 2003) has detailed information on our methodology and how we compile trimmed means and weighted medians.
The central and local government charges index, which appears in tables 3.01, 3.02, and 3.03, made up 9.99 percent of the CPI at the September 2017 quarter.
The central and local government charges non-standard series includes items such as:
– Housing New Zealand and local authority rentals
– land transfer registration fees
– local authority rates
– water supply and part of refuse disposal, electricity
– prescription charges and oral contraception, general practitioner fees
– vehicle relicensing fees, road user charges, driver licensing fees
– postage
– State and integrated schools, tertiary education, other education
– official passports, licences and certificates.
The goods and services component series that appear in tables 3.01, 3.02, and 3.03 allow customers to decompose the CPI into its goods and services components, respectively. The goods component made up 61.36 percent, and the services component 38.64 percent at the September 2017 quarter.
The goods component comprises:
– the food group (except restaurant meals)
– alcoholic beverages and tobacco group
– clothing and footwear group (except clothing services)
– purchase of new housing, property maintenance materials, water supply, and household energy
– household contents and services group (except repair and hire of household appliances, hire of major tools and equipment, and other household services)
– medical products, appliances and equipment; dentures
– purchase of vehicles, vehicle parts and accessories, petrol, other vehicle fuels and lubricants
– telecommunication equipment
– recreation and culture group (except recreational and cultural services, accommodation services)
– miscellaneous goods and services group (except hairdressing and personal grooming services, jewellery and watch repair, insurance, credit services, and other miscellaneous services).
The services component comprises all items not included in the goods component.
Index reference period
All CPI indexes have an index reference period of the June 2017 quarter (=1000), except where we added additional indexes in subsequent CPI reviews.
All index series have been updated from a previous base period of June 2006 as part of the 2017 CPI review, this change was made as some index series had fallen to 2 index points which reduces the quality of data. For example moving from 50 to 49 index points requires a fall of 2.0 percent, compared to a rebased index (=1000) which will show a movement as low as 0.1 percent.
One class and subgroup series was discontinued as part of the 2017 review, Package Holidays. This item is now split out into International Air transport, and Overseas Accommodation.
Availability of regional indexes
We publish indexes for five broad regions: Auckland, Wellington, Canterbury (Christchurch and Timaru until the September 2014 quarter, then Christchurch only), rest of North Island, and rest of South Island. We consider these series to be fit for purpose and do not make significant use of national pricing indicators in compiling them.
Interpreting the data
Seasonal adjustment
The headline CPI is not seasonally adjusted, however, we do produce an analytical seasonally adjusted series at the CPI and FPI at the all groups, group, subgroup, and class levels.
Rounding index numbers and calculating percentage changes
We publish percentage changes to one decimal place and calculate them from index numbers rounded to the nearest index point. For comparisons that cross the index reference period, customers should compare rounded index numbers (for the later period) with unrounded index numbers (for the earlier period).
Detailed contribution information tables
Tables 8.01 and 8.02 include supplementary analytical information for group, subgroup, and class contributions to the overall change in the all groups CPI. We give the contribution information as index points, percentage points, and percentage contributions from the previous quarter and from the same quarter of the previous year. These tables provide a broader perspective of the categories contributing to movement in the all groups CPI. Where there is only one class within a subgroup, we omit the class to avoid unnecessary duplication.
We calculate the information in tables 8.01 and 8.02 from unrounded index numbers. Percentage changes are calculated from index numbers rounded to the nearest index point (see 'Rounding of index numbers and calculation of percentage changes', above). As such, the sum of each of the group, subgroup, or class percentage point contributions may differ from the overall percentage change in the CPI all groups.
Weighted average retail prices of selected food items
We include a selection of average retail prices for the current and previous quarter in table 5. The weighted average prices are calculated by applying index movements to weighted average prices for the June 2006 quarter CPI. They are not statistically accurate measures of average transaction price levels, but do provide a reliable indicator of percentage changes in prices.
Determining the effect of a specified change in a lower-level index
The index points effect and percentage contribution on a higher-level index of a specified percentage change in a lower-level index that contributes to the higher-level index can be determined by:
Adjusting the lower-level index for the previous period (In-1,low) by the specified percentage change (PCn,low) to derive the index number for the current period.
Calculating the index points effect on the higher-level index of the specified change in the lower-level index.
Calculating the percentage change in the higher-level index that would be caused by the specified change in the lower-level index.
I : index
n : period n, where n is the September 2014 quarter or a subsequent quarter (CPI), or the July 2014 month or a subsequent month (FPI)
n-1 : period n-1
Jun14 : June 2014 quarter (CPI) or June 2014 month (FPI)
low : lower-level index
high : higher-level index
W : expenditure weight, expressed as a percentage of the all groups (CPI) or group (FPI) index
PC : percentage change
PE : index points effect
low-on-high : lower-level index on higher-level index
Example: The effect of a 5.0 percent increase in the petrol index (weight is 5.03 percent in the CPI) from the June 2014 quarter to the September 2014 quarter on the all groups CPI index is calculated by: 1. Increasing the petrol index for the June 2014 quarter by 5.0 percent to derive the index number for the September 2014 quarter:
Calculating the index points effect on the all groups CPI index of the 5.0 percent increase in the petrol index.
Calculating the percentage change in the all groups CPI index that would be caused by a 5.0 percent change in the petrol index:
Timing of published data
We generally publish the CPI 12 working days after the reference quarter, with the December quarter typically being an exception due to the holiday break.
en-NZ
