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The chilling facts about ice cream: tracking prices in the CPI

This article looks back at ice cream prices over the three decades to 2010.

Introduction

New Zealanders are among the highest per capita consumers of ice cream in the world, according to the New Zealand Ice Cream Manufacturers Association,1 coming in behind the United States and about level with Australia. Ice cream and edible ices account for about $1 of every $44 spent on food by New Zealand households.

Ice cream has been in the consumers price index (CPI) basket of goods and services since being introduced to the basket in 1949. Initially a 'slice' of ice cream was priced. This had an average price of around 3 pence in 1949. That's equivalent to about 85 cents in today's terms, allowing for general food price inflation.

The ice cream item in the CPI basket was changed to a one-pint block in 1955, showing an average price of 20 pence. In today's terms, that is equivalent to about $3.65. During the 1970s the specification for ice cream in the CPI basket was changed to a metric two-litre tub and an additional item of an ice block was introduced. Following the 1980 CPI review price movements have been tracked using three separate items:

  • ice cream bought in bulk (two-litre container)
  • novelty ice cream
  • ice blocks.

The average price of a two-litre tub of ice cream in 2010 was around $5.40, compared with an average price of 85 cents in 1975 and $2.10 in 1981. Tubs of ice cream are priced at both supermarkets and convenience stores. The current average prices are $5.35 at supermarkets, where a range of brands is priced, and $6.50 at convenience stores, where the price of the cheapest available two-litre tub is collected. The average prices quoted are weighted averages of the selected items priced for the CPI, weighted by store-type expenditure and regional population estimates.

New Zealanders' taste in ice cream is uniquely characterised by the popularity of hokey pokey flavour, which is the second-most popular flavour after vanilla.1 Many of the current novelty and ice block favourites, Jelly Tip, Trumpet, FruJu, and Popsicle, have been popular for decades. Jelly Tip was launched in the 1950s. Trumpet and FruJu are inventions of the 1960s. Popsicle ice blocks, originally called TT2s, were released in the 1970s. These have been joined by the more recent addition of Memphis Meltdown2 and Magnum3 in the 1990s.  

Weight in the index

Following the latest CPI review, in the June 2008 quarter, spending on ice cream and edible ices accounted for 0.41 percent of the CPI basket and 2.29 percent of the food group. The weight has been between 1.00 percent and 2.51 percent of the food group since 1949. Expenditure on ice and ice cream confectionary has grown as a proportion of household expenditure on food.

Figure 1

Graph, Ice cream expenditure as a percentage of food group.
 

Ice cream price movements

The prices of all three of the ice cream and edible ice items rose between the March 1981 and September 2010 quarters. There were much greater price increases for ice blocks (up 768 percent) and novelty ice cream (up 581 percent) compared with the increase for bulk ice cream (up 148 percent). The annual average price increase was 7.6 percent for ice blocks, 6.7 percent for novelty ice cream, and 3.1 percent for bulk ice cream between the March 1981 and September 2010 quarters.

The price of bulk ice cream was broadly flat between the March 1990 and March 2007 quarters. Since then there has been a noticeable increase in ice cream prices. Bulk ice cream increased at an annual average rate of 8.0 percent between the March 2007 and September 2010 quarters. Ice blocks and novelty ice cream had annual average increases of 9.0 percent and 4.9 percent, respectively, over the same period. The food group increased at annual average rate of 4.7 percent between the March 2007 and September 2010 quarters.

Figure 2

Graph, Food and ice cream price.

Figure 3 shows how prices of each of the three ice cream products have changed relative to the CPI food group. Ice blocks and novelty ice cream have risen much faster than the food group. In contrast, the price index for bulk ice cream has risen by much less than the overall food group price index.

Figure 3

Graph, Ice cream prices relative to food prices. 

1. http://www.nzicecream.org.nz/industry.htm
2. http://www.tiptop.co.nz/
3. http://www.streetsicecream.co.nz/love-the-facts/

 

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