Consumers Price Index: March 2010 quarter

Consumers price index quarterly movement

The consumers price index (CPI) recorded an increase of 0.4 percent in the March 2010 quarter. This follows a decrease of 0.2 percent in the December 2009 quarter and a 1.3 percent increase in the September 2009 quarter.

Six groups increased, with food (up 1.0 percent) and transport (up 1.1 percent) being the most significant contributors. Other upward contributions came from education (up 4.8 percent), alcoholic beverages and tobacco (up 1.3 percent), housing and household utilities (up 0.3 percent), and health (up 0.9 percent).

Five groups recorded decreases: recreation and culture (down 1.4 percent), household contents and services (down 1.3 percent), clothing and footwear (down 1.2 percent), miscellaneous goods and services (down 0.5 percent), and communication (down 0.8 percent).

The most significant individual upward contributions came from higher prices for petrol (up 6.9 percent), fresh milk (up 6.0 percent), and university fees (up 6.1 percent). The most significant individual downward contributions came from lower prices for international air transport (down 8.3 percent) and audio-visual equipment (down 7.6 percent).
 

Distribution of item-level movements

The table below outlines the distribution of price movements in the December 2009 and March 2010 quarters. The CPI has been partitioned into those national item-level indexes that increased, showed no change, or decreased.

The distribution of item-level movements shows that in the March 2010 quarter:

• The percentage of expenditure weight of items that increased in price rose, while the percentage of expenditure weight of items that decreased in price fell.
• The weighted average price increase had a small fall, while the weighted average price decrease fell more significantly.

These factors resulted in a 0.4 percent increase in the CPI for the March 2010 quarter, following a decrease of 0.2 percent in the December 2009 quarter.

The following graph shows the index point contributions of all items that rose in price, all items that fell in price, and the total index point movement.

 

CPI annual movement

The CPI increased 2.0 percent in the year to the March 2010 quarter, following increases of 2.0 percent and 1.7 percent for the years to the December 2009 and September 2009 quarters, respectively.

Eight of the 11 groups in the CPI made upward contributions to the increase in the year to the March 2010 quarter. The most significant upward group contribution came from transport (up 6.4 percent). Other upwards contributions came from housing and household utilities (up 1.6 percent), food (up 1.2 percent), health (up 3.9 percent), alcoholic beverages and tobacco (up 2.3 percent), clothing and footwear (up 2.3 percent), miscellaneous goods and services (up 1.4 percent), and education (up 4.8 percent).

The recreation and culture group (down 1.3 percent), the communication group (down 0.9 percent), and the household contents and services group (down 0.2 percent) made downward contributions.

The most significant individual upward contributions came from higher prices for petrol (up 11.5 percent) and second-hand cars (up 9.9 percent).

The most significant individual downward contribution came from lower prices for audio-visual equipment (down 18.6 percent).

CPI analytical series

In the March 2010 quarter, the tradable component increased 0.1 percent and the non-tradable component increased 0.5 percent.

For the year to the March 2010 quarter, the non-tradable component increased 2.1 percent. The 2.1 percent annual increase in the non-tradable component is the lowest since the year to the December 2001 quarter, reflecting relatively low annual increases for electricity, rentals for housing, the purchase of new housing, and property maintenance services.

The tradable component rose 2.0 percent for the year to the March 2010 quarter. The most significant upward contributions came from petrol and second-hand motor cars.

 

In the March 2010 quarter, the trimmed mean measures, which exclude extreme price increases and decreases, recorded quarterly increases ranging from 0.3 to 0.4 percent. This indicates that underlying price change for the quarter was in line with the CPI overall. The annual trimmed mean measures recorded annual increases of between 2.1 percent and 2.3 percent, which are higher than the 2.0 percent increase in the all groups CPI.

 

Food

Food prices rose 1.0 percent in the March 2010 quarter, following a decrease of 2.4 percent in the December 2009 quarter and a rise of 1.7 percent in the September 2009 quarter.

Four of five food subgroups made upward contributions, with higher prices for grocery food (up 1.1 percent), fruit and vegetables (up 2.3 percent), meat, poultry, and fish (up 1.3 percent), and restaurant meals and ready-to-eat food (up 0.4 percent). The non-alcoholic beverages subgroup fell 0.3 percent.

The rise in grocery food was influenced by higher prices for fresh milk (up 6.0 percent), cheese (up 7.3 percent), and butter (up 19.7 percent).

Fruit prices increased 5.8 percent after three consecutive quarterly falls. This was largely the result of higher prices for kiwifruit (up 53.1 percent) as New Zealand kiwifruit is in short supply in late summer, with prices typically peaking in March months.

The food group increased 1.2 percent from the March 2009 quarter to the March 2010 quarter. This is the lowest annual increase in the food group since the year to the June 2005 quarter, when prices increased 1.1 percent. Although food prices are now 1.2 percent higher than a year ago, they are 10.1 percent higher than two years ago.

In the year to the March 2010 quarter, four subgroups recorded increases: restaurant meals and ready-to-eat food (up 2.4 percent), grocery food (up 1.3 percent), non-alcoholic beverages (up 3.7 percent), and meat, poultry, and fish (up 0.8 percent). The price of fruit and vegetables fell 2.6 percent in the year to the March 2010 quarter.

 

Transport

Transport prices increased 1.1 percent in the March 2010 quarter, following increases of 1.5 percent and 3.1 percent in the December and September 2009 quarters, respectively.

The most significant individual upward contribution came from higher prices for petrol (up 6.9 percent), which reached their highest level since the September 2008 quarter. Petrol prices rose throughout the March 2010 quarter and were about 5 percent higher in the March month than in the January month. If petrol prices had remained unchanged from the December 2009 quarter, the CPI would have remained unchanged in the March 2010 quarter.

International air transport prices fell 8.3 percent in the March 2010 quarter. International air transport prices usually fall in March quarters following seasonal rises in December quarters. The fall in the March 2010 quarter follows a rise of 13.9 percent in the December 2009 quarter, which was the largest increase since the series began, in the March 1981 quarter. International air transport prices are now 0.7 percent lower than a year ago and 6.4 percent lower than two years ago.

The transport group increased 6.4 percent from the March 2009 quarter to the March 2010 quarter, with higher prices for petrol (up 11.5 percent) and second-hard motor cars (up 9.9 percent). Domestic air transport prices fell 8.7 percent for the year to the March 2010 quarter.

 

Other groups

In the March 2010 quarter, upward movements were recorded for the following other groups: education (up 4.8 percent), alcoholic beverages and tobacco (up 1.3 percent), housing and household utilities (up 0.3 percent), and health (up 0.9 percent). Combined, these groups contributed 2.97 to the overall CPI movement of 3.62 index points.

Education prices rose 4.8 percent in the March 2010 quarter. This is the largest quarterly increase since the March 2000 quarter when education prices increased 7.7 percent. The most significant upward contribution came from higher university fees (up 6.1 percent), which reflects higher course fees and new compulsory levies introduced by some universities to cover the costs of providing existing services to students.

Primary and secondary education fees rose 3.2 percent, which is the smallest March quarter increase in eight years. Fees for the other education class rose 23.4 percent, reflecting a reduction in government subsidies for adult and community education courses at school-based providers. An adjustment was made to reflect lower participation in courses offered by school-based providers (which faced reductions in government subsidies), relative to participation in courses offered at other community providers, which did not face the same subsidy reductions.

The increase in alcoholic beverages and tobacco was influenced by higher prices for cigarettes and tobacco (up 1.5 percent), and alcohol consumed off licensed premises (up 1.5 percent). The annual indexation of cigarettes and tobacco excise duty occurred on 1 January, resulting in an increase of 1.58 percent in the excise duty (based on the movement in the 'CPI less credit services' index from the September 2008 quarter to the September 2009 quarter). Prices for alcohol consumed off licensed premises rose following significant specialling in December 2009.

In the March 2010 quarter, the following groups made downward contributions to the overall CPI movement: recreation and culture (down 1.4 percent), household contents and services (down 1.3 percent), clothing and footwear (down 1.2 percent), miscellaneous goods and services (down 0.5 percent), and communication (down 0.8 percent). These groups contributed -3.30 index points to the overall CPI movement.

The 1.4 percent fall in recreation and culture reflected lower prices for audio-visual equipment (down 7.6 percent), following a fall of 9.0 percent in the previous quarter. Lower prices for furniture and furnishings (down 3.3 percent), and household appliances (down 1.6 percent) contributed to the decrease in the household contents and services group.

 

 

Change to the timing of the food price index release

The food price index (FPI) is usually released nine working days after the month, except every third month, when it is released with the quarterly CPI. For example, the March FPI is released with the March quarter CPI, 12 working days after the quarter.

Statistics New Zealand has reviewed this practice and will in future release each FPI on the ninth working day after the end of the month.

This change will take place for the June 2010 FPI, which will be released on 13 July. The June 2010 quarter CPI will be released on 16 July.

For technical information contact: 
Cindy Qin or Daniel Griffiths
Wellington 04 931 4600
Email: info@stats.govt.nz

Next release ...

Consumers Price Index: June 2010 quarter will be released on 16 July 2010.