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Consumers Price Index: December 2011 quarter
Embargoed until 10:45am  –  19 January 2012
Commentary

CPI falls 0.3 percent in December 2011 quarter

The consumers price index (CPI) fell 0.3 percent in the December 2011 quarter. This follows rises of 0.4 percent in the September 2011 quarter and 1.0 percent in the June 2011 quarter. This is the first quarterly fall in the CPI since a 0.2 percent fall in the December 2009 quarter. It is also the largest fall since the December 2008 quarter, when the CPI decreased 0.5 percent as a result of petrol falling 22 percent.

Five groups decreased in price in the December 2011 quarter. Food (down 2.2 percent) and communication (down 3.5 percent) made the most significant downward contributions.

Six groups increased in price. The largest contribution came from transport (up 1.4 percent).

The most significant downward contribution came from lower prices for vegetables (down 25 percent). Lower prices were also recorded for telecommunication services (down 3.6 percent).

The most significant individual upward contribution came from seasonally higher prices for international air transport (up 5.8 percent). Higher prices were also recorded for petrol (up 0.9 percent), second-hand cars (up 1.8 percent), and rentals for housing (up 0.4 percent).

Consumers price index groups: December 2011 quarter
Group Index points contribution to CPI Quarterly percentage change
Food 
Communication 
Household contents and services 
Clothing and footwear 
Alcoholic beverages and tobacco 
Education 
Recreation and culture 
Miscellaneous goods and services 
Health 
Housing and household utilities 
Transport
-4.97
-1.39
-0.77
-0.11
-0.11
0.03
0.10
0.26
0.33
0.76
2.38
-2.2
-3.5
-1.5
-0.3
-0.2
0.2
0.1
0.3
0.5
0.3
1.4
All groups CPI -3.49 -0.3
Note: Points contribution may not sum to total due to rounding.

 Graph, Index points contribution to consumers price index, December 2011 quarter.

CPI increases 1.8 percent for the year

The CPI increased 1.8 percent in the year to the December 2011 quarter, following increases of 4.6 percent and 5.3 percent in the years to the September 2011 and June 2011 quarters, respectively. The latest annual increase does not include most of the effects of the goods and services tax (GST) increase from 12.5 to 15 percent that occurred in October 2010.

Seven of the 11 groups in the CPI made upward contributions in the year to the December 2011 quarter.

The most significant upward contributions came from:

  • transport (up 5.7 percent) 
  • housing and household utilities (up 2.4 percent) 
  • food (up 1.7 percent)
  • alcoholic beverages and tobacco (up 3.7 percent).

The communication group (down 8.8 percent) and the recreation and culture group (down 1.8 percent) made significant downward contributions.

The most significant individual upward contribution came from higher prices for petrol (up 11 percent). Prices also rose for cigarettes and tobacco (up 9.4 percent, reflecting higher excise duty), rentals for housing (up 2.0 percent), second-hand cars (up 5.1 percent), and local authority rates and payments (up 4.6 percent).

The most significant individual downward contributions came from lower prices for telecommunication services (down 8.6 percent), audio-visual equipment (down 18 percent), and vegetables (down 8.3 percent).

Food group down due to lower vegetable prices

Food prices fell 2.2 percent in the December 2011 quarter, following rises of 1.7 percent and 1.1 percent in the September 2011 quarter and the June 2011 quarter, respectively.

Four of the five food subgroups made downward contributions in the December 2011 quarter.

The most significant downward contribution came from lower prices for vegetables (down 25 percent), which accounted for most of the decrease in food prices. If vegetable prices had remained unchanged from the September 2011 quarter, the CPI would have increased 0.1 percent, rather than falling 0.3 percent.

Lower vegetable prices were largely influenced by tomatoes (down 57 percent) and lettuce (down 64 percent). Vegetable prices fell strongly from their winter peak in July, which was higher than usual due to a supply shortage following the Queensland floods earlier in 2011.

Other significant contributions came from seasonally lower prices for strawberries (down 43 percent) and cucumber (down 55 percent).

The food group increased 1.7 percent from the December 2010 quarter to the December 2011 quarter.

Four of the five food subgroups increased in the year to the December 2011 quarter, with the most significant contribution coming from higher prices for grocery food (up 3.1 percent). The only subgroup to decrease in the year to the December 2011 quarter was fruit and vegetables (down 6.9 percent).

The most significant individual upward contributions to the annual movement came from ready-to-eat food (up 2.6 percent) and bread (up 6.1 percent).

Graph, Food group and selected indexes, quarterly indexes, December 2007 quarter to December 2011 quarter.  

Transport group rises due to higher international air fares 

Transport group prices increased 1.4 percent in the December 2011 quarter. This follows a price fall of 1.0 percent in September 2011 quarter, and a price rise of 2.7 percent in the June 2011 quarter.

The most significant individual upward contribution came from seasonally higher international air fares (up 5.8 percent). This rise was influenced by seasonally higher fares to Asia (after a big price fall in the September 2011 quarter) and Europe.

Higher prices were also recorded for petrol (up 0.9 percent) and second-hand cars (up 1.8 percent).

Prices for new cars fell 0.7 percent, partly as a result of quality improvements. For more information about new car prices over the past 10 years, see Bigger, safer, better: tracking retail and quality adjusted new car prices in the CPI.

The transport group increased 5.7 percent from the December 2010 quarter to the December 2011 quarter. The most significant individual upward contribution came from higher prices for petrol (up 11 percent). Other upward contributions came from second-hand motor cars (up 5.1 percent), domestic air fares (up 14 percent), and diesel (up 22 percent).

 Graph, Transport group and selected classes, quarterly indexes, December 2007 quarter to December 2011 quarter.

Summary of other group movements in the CPI

In the December 2011 quarter, the following groups decreased:

  • communication (down 3.5 percent) 
  • household contents and services (down 1.5 percent) 
  • clothing and footwear (down 0.3 percent)
  • alcoholic beverages and tobacco (down 0.2 percent).

Combined, these groups contributed -2.37 index points to the overall CPI decrease of 3.49 index points.

In the December 2011 quarter, the following groups increased:

  • housing and household utilities (up 0.3 percent)
  • health (up 0.5 percent)
  • miscellaneous goods and services (up 0.3 percent)
  • recreation and culture (up 0.1 percent)
  • education (up 0.2 percent).

Combined, these groups contributed an increase of 1.48 index points to the overall CPI decrease of 3.49 index points.

Within the communication group, the most significant downward contribution came from lower prices for telecommunication services (down 3.6 percent).

The fall in telecommunication services reflects lower Internet charges, due to increased data caps and lower prices for broadband plans, cheaper international calling rates from landlines, and lower cellphone service charges. Some of these changes took effect part way through the September 2011 quarter.

The decrease in household contents and services came from lower prices for furniture and furnishings (down 2.8 percent) and glassware, tableware, and household utensils (down 6.8 percent). These were influenced by an increase in the level of discounting. A higher proportion of tracked items were on special in the December 2011 quarter than in the previous quarter, or than in the December 2010 quarter.

The main contributors to the decrease in the alcoholic beverages and tobacco group came from spirits (off licence) and beer (off licence) with an increase in the level of discounting.

The increase in housing and household utility prices came from higher prices for rentals for housing (up 0.4 percent). Other upward contributions came from higher prices for property maintenance services (up 0.8 percent), and purchase of new housing (up 0.4 percent).

Electricity prices fell 0.5 percent in the December 2011 quarter, reflecting increases in some online prompt payment discounts that took effect part way through the September 2011 quarter. The fall also reflected more customers taking up these discounts in the December quarter. There were also some price increases, and moves to lower summer rates in some regions. 

Alcoholic beverage prices rose 0.7 percent in the year to the December 2011 quarter. This is the smallest annual increase since a 0.2 percent increase in the year to the September 1992 quarter.

The communication group fell 8.8 percent in the year to the December 2011 quarter. 


Graph, Other selected classes, quarterly indexes, December 2007 quarter to December 2011 quarter.  

CPI analytical series

In the December 2011 quarter, the tradable component of the CPI fell 0.9 percent and the non-tradable component of the CPI rose 0.2 percent.

The 0.9 decrease in the tradable component is the largest fall since a decrease of 2.1 percent in the December 2008 quarter, when petrol prices fell 22 percent. The tradable component was influenced by a fall in the prices of vegetables. Lower prices were also recorded for audio-visual and computing equipment, for furniture and furnishings, and for milk, cheese, and eggs.

The most significant individual upward contribution to the tradable component came from seasonally higher prices for international air transport. Higher prices were also recorded for petrol, second-hand motor cars, and package holidays.

The rise in the non-tradable component were influenced by actual rentals for housing, property maintenance services, and purchase of new housing.

The most significant downward contributor to the non-tradable component came from lower prices for telecommunication services.

For the year to the December 2011 quarter, the tradable component increased 1.1 percent, while non-tradables increased 2.5 percent.

 Graph, Consumers price index, tradables, non-tradables, and all groups – quarterly indexes, December 2007 quarter to December 2011 quarter.

In the December 2011 quarter, the trimmed mean measures – which exclude extreme price rises and falls – recorded quarterly rises ranging between 0.1 (for the lowest trim of 5 percent) and 0.3 percent (for the highest trim of 30 percent). This compares with a fall of 0.3 percent for the all groups CPI.

When the CPI basket is reweighted, as happened with the September 2011 quarter release, the annual trimmed mean measures can be calculated using either the previous weights (the June 2008 quarter weights) or the latest weights (the June 2011 quarter weights). For the December 2011 quarter, the annual trimmed mean measures based on June 2011 quarter weights recorded increases of between 1.9 percent and 2.1 percent. This is slightly above the annual increase in the all groups CPI.

Graph, Trimmed means and all groups, percentage changes, December 2011 quarter.

Impact of items that rose and fell in price

The graph below shows the impact of the items that rose and fell in price. Comparing the December 2011 quarter with the September 2011 quarter, the impact of the items that rose in price is smaller, and the impact of items that fell in price is larger. This led to a 0.3 percent decrease for the December 2011 quarter CPI, following a 0.4 percent increase in the September 2011 quarter.

 Graph, Index points contribution to consumers price index, December 2008 quarter to December 2011 quarter.

The following table outlines the distribution of price movements in the September 2011 and December 2011 quarters. The CPI has been partitioned into national item-level indexes that increased, showed no change, or decreased.

Distribution of item-level index movements
National item-level index movements Jun 2011
qtr to Sep 2011 qtr
Sep 2011
qtr to Dec 2011 qtr
Increase in price
Number of items
Percentage of all items
Percentage of expenditure weight
Index points contribution
Percentage point contribution
Weighted average price increase (%)
380
53.5
58.8
14.4
1.2
2.1
345
48.6
62.0
10.9
0.9
1.5
No change in price
Number of items
Percentage of all items
Percentage of expenditure weight
112
15.8
7.7
92
13.0
8.6
Decrease in price
Number of items
Percentage of all items
Percentage of expenditure weight
Index points contribution
Percentage point contribution
Weighted average price decrease (%)
218
30.7
33.5
-10.2
-0.9
2.6
273
38.5
29.4
-14.4
-1.2
4.2

Annual indexation of New Zealand superannuation rates and welfare benefits

Adjustments made to New Zealand superannuation rates and welfare benefit rates at 1 April 2012 will be based on the percentage change in the CPI 'all groups less cigarettes and tobacco subgroup' from the December 2010 quarter to the December 2011 quarter, which is an increase of 1.77 percent.

A 'benefit indexation table' showing the calculation of the 1.77 percent increase is included in the 'Downloads' section of this information release on the Statistics NZ website (www.stats.govt.nz).

Impact of Christchurch earthquake on the CPI

There was no material impact on the December 2011 quarter CPI price collection from the Christchurch earthquakes.

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