A review of the CPI was implemented when the September 2011 quarter CPI was released in October 2011. The review involved reselecting and reweighting the basket of representative goods and services to ensure it continues to reflect household spending patterns.
On average, the New Zealand CPI is reweighted once every three years. Once each new set of CPI expenditure weights is calculated, it is possible to use the existing and new weights to calculate a ‘superlative’ index on a retrospective basis. This paper – which draws on and extends work published by Statistics New Zealand 2007 and 2008 – presents the results of a retrospective superlative index time series calculated between the June 2002 and June 2011 quarters. Expenditure weights, at the June 2002, June 2006, June 2008, and June 2011 quarters, were used to compile the superlative index series between the June 2002 and June 2011 quarters.
These analytical time series indicate the effect of commodity substitution on the fixed-weight CPI. Commodity substitution occurs when households react to changes in relative prices by reducing purchases of goods and services showing higher relative price change, and instead buy more of those showing lower relative price change. These time series also reflect the impact of changes to the data sources and methods used to compile expenditure weights.
This paper also presents analysis of how the CPI would have tracked had the index not been reweighted in 2006 and/or 2008.
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Citation
Statistics New Zealand (2011). Analytical retrospective superlative index based on New Zealand’s CPI: 2011. Wellington: Statistics New Zealand
ISBN 978-0-478-37742-2 (online)
Published in November 2011 by
Statistics New Zealand
Tatauranga Aotearoa
Wellington, New Zealand