Consumers Price Index retail outlet sample review

Background

The sample of retail outlets from which prices are collected was reselected as part of the 2006 Consumers Price Index (CPI) review.

In December 2005, Statistics New Zealand released CPI Regions discussion paper covering a range of regional topics concerning the CPI and undertook a public consultation. One of the key issues Statistics NZ consulted on was options for optimising the regional sample allocation, given existing resources.

An outcome of the review was that the sample of 15 pricing centres remained unchanged. However, price collection effort has been redistributed to align more closely with the population shares of the regions. This has resulted in more prices being collected in the larger pricing centres, particularly Auckland. The objective of this reallocation was to optimise the accuracy of the national CPI, while taking into account a secondary requirement to produce indexes of good quality for five broad regions. More details about the outcome of the consultation are published in CPI Regions – Outcome of review.

The sample of retail outlets has been reselected to ensure it remains relevant and representative. For each grouping of similar goods and services in the basket, price collectors in each of the 15 regional centres were given target numbers of outlets to select, broken down by store type (such as ‘department store’ and ‘appliance store’). Store type information from the Household Economic Survey (HES) was used to determine the main store types for each group of similar goods and services in the basket. In some cases, price collectors were also given further guidance about specific chains to include in the sample. Price collectors then used their judgement to select representative retail outlets in the pricing centres to meet the target numbers of outlets.

The review only included items priced by visiting retail outlets. Postal questionnaires are used to collect prices for a number of sampled goods and services, including rented dwellings and construction of new dwellings. The postal samples are reselected on a rolling basis and were not specifically reviewed as part of the CPI review. The results presented in this article therefore relate only to retail outlets visited by price collectors.

Price collection from retail outlets generally takes place at three frequencies: weekly, monthly and quarterly. Fresh fruit and vegetable prices and petrol prices are collected weekly, due to price volatility. Prices for all other food items are collected monthly from retail outlets, as are a number of non-food items such as non-food groceries, alcoholic drinks consumed off licensed premises, cigarettes and tobacco. Items that are priced quarterly at retail outlets include electrical appliances, new cars, clothing and sporting equipment. Some items, including seasonal clothing, barbecues and heaters, are only priced in specific quarters, when they are freely available.

It should be noted that this analysis excludes seasonal items that are collected from retail outlets in only the June quarter, such as winter clothing, duvet inners and heaters. These items have not been included in the analysis because the new sample for these items will not be fully implemented until the June 2007 quarter. Summer seasonal items, on the other hand, are included in the analysis as they have been fully implemented in the CPI.

top

Comparisons of old and new sample

As a result of the outlet reselection process, many existing retail outlets were retained and outlets that were no longer representative were dropped. A significant number of new retail outlets were also recruited. Table 1 shows the distribution of new outlets by pricing centre. It has been compiled by comparing the June 2006 month/quarter collection period (the last period prices were collected for the old sample) with the December 2006 month/quarter equivalent.

At the national level, 177 (or 23 percent) of the 773 outlets in the monthly collection were new to the sample. For the quarterly collection (excluding winter seasonal items) 653 new outlets, or 31 percent of 2,138 quarterly outlets, were recruited.

At the regional level, it can be seen in Table 1 that each region added at least one new monthly outlet and at least 10 quarterly outlets. Pricing centres with the highest numbers of new outlets were Auckland, Christchurch and Wellington. This is partly due to increases in the total numbers of outlets sampled in these regions. There was a decline in the total number of outlets surveyed in some regions, such as Tauranga and Napier-Hastings. However, these regions still had a number of new outlets added.

Table 1
Number of new outlets
By pricing centre ¹

1 Excluding winter seasonal items

top

Monthly collection

This analysis includes all monthly items priced by visiting retail outlets, such as a majority of food items, non-food groceries, alcoholic drinks consumed off licensed premises, cigarettes and tobacco.

The overall number of price quotes collected each month by visiting retail outlets has increased slightly by about 400 quotes to about 16,000 quotes per month. However, there has been a reallocation of collection effort among the 15 pricing centres. Table 2 shows the distribution of price quotes by region for two pricing periods: June 2006 (old sample) and December 2006 (new sample). The proportion of prices collected in each of the three largest centres has increased, with Auckland seeing the largest increase (from 11 percent to 14 percent), followed by Christchurch and Wellington.

Another aspect considered as part of the review was refining the coverage of supermarket chains. Prior to the review, prices were collected from one outlet of each available supermarket chain within each pricing centre, except Auckland, where two outlets were surveyed for some chains. As part of the review, a decision was made to extend collection to two sites for all available chains in Auckland, given the region's importance and to properly reflect the use of supermarket loyalty cards. An additional Wellington site was also added to the survey to allow supermarket loyalty cards to be better reflected. Both standard supermarket shelf prices and loyalty card prices are included in the CPI.

Table 2
Proportion of price quotes by region
Monthly retail outlet collection

top

Quarterly collection

Quarterly priced items that are collected by visiting retail outlets include electrical appliances, new cars, clothing and sporting equipment.

As outlined earlier, this analysis excludes seasonal items that are only collected in the winter pricing periods, such as winter clothing, duvet inners and heaters. These items have not been included in the analysis because the new sample for these items will not be fully implemented until the June 2007 quarter.

The overall number of prices collected quarterly has also had a relatively minor change, increasing by about 650 quotes to about 12,500 quotes per quarter. However, the regional distribution of these price quotes has changed more significantly. As shown in Table 3, the proportion of quotes collected in Auckland had by far the largest increase, from 11 percent of the total to 18 percent. Wellington and Christchurch also had relatively significant increases. Tauranga, Napier-Hastings and Palmerston North had significant decreases. In the old sample, far more prices were being collected than was warranted, given the population shares of these three pricing centres.

Table 3
Proportion of price quotes by region
Quarterly retail outlet collection ¹

1 Excluding winter seasonal items

top

Petrol weekly collection

The aim of the fuel outlet sample review was to improve the coverage of the sample, to review the number of prices required and to redistribute collection effort, where appropriate. This resulted in the number of price quotes for petrol decreasing from 474 per week to 395 per week. Petrol prices are now collected from 132 outlets across the 15 pricing centres, compared with 158 outlets in the previous sample.

As part of this review, the range of outlets where petrol prices are collected has been improved at the regional level to better cover available brands and types of fuel. The updated sample consists of an appropriate mix of chains as well as company owned/controlled and independent sites. It also reflects a mix of sites supplying the premium grade of petrol 95 octane and those supplying 98 octane.

top

Fruit and vegetables weekly collection

Three vegetable items – beans, parsnips and spring onions – were added to the CPI basket as part of the 2006 CPI review. These additions were to improve the representation of fresh vegetables in the basket, as the fresh vegetables index has shown relatively high variability in price movements. As a result, prices for 31 fresh fruit and vegetable items are now being collected each week, compared to 28 in the old sample. In addition, pricing officers are now visiting 111 outlets in 15 pricing centres, eight more than previously.

This has resulted in an increase in the number of fresh fruit and vegetable price quotes of up to 550 quotes per week, which can vary from week to week due to availability.

Back to Price Index News: April 2007