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Price Index News: October 2010

1. Short stories

Slicing and dicing meat and poultry prices

Slicing and dicing meat and poultry prices looks at how beef, lamb, and poultry prices have changed over the past three decades. Beef prices have increased broadly in line with overall food prices during the past 30 years, while lamb prices have increased at a greater rate and poultry prices have increased at a lower rate.

Flying here and flying there

Flying here and flying there looks at how air fares have changed since 1981. Domestic air fares have increased roughly in line with the consumers price index, while kiwi travellers venturing abroad today enjoy international air fares that are not much higher than they were three decades ago.  

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2. Working with others

Purchasing power parity meeting in Paris 

In September 2010, the Organisation for Economic Co-operation and Development (OECD) held a purchasing power parities (PPPs) meeting for non-European countries of the OECD. Daniel Griffiths from Statistics New Zealand's Prices unit attended this meeting, which was held in Paris. Also attending were representatives from the relevant statistical agencies of the non-European OECD countries: the United States of America, Canada, Chile, Israel, Mexico, Japan, Korea, and Australia, as well as representatives from Eurostat (the Statistical Office of the European Communities), the OECD, and Russia.

The OECD calculates PPPs for its member countries every three years. The agenda for this meeting covered the completion of the results from the 2008 round, with a timeline set up for publication of these results. Looking forward to the 2011 PPP round, attendees also discussed how improvements could be made in the measurement and collection of prices for the health, services (such as energy, household services, and telecommunications), and furniture. This provided the non-European countries with the opportunity to discuss any issues they have with collecting prices for the PPP programme. Participants were also given an opportunity to present and discuss their methods of price collection and validation of results.

The meeting also included a discussion of the 2011 International Comparison Programme (ICP), which aims to include over 180 countries in the 2011 round comparison. It was discussed how the ICP would impact on the OECD's PPP programme, particularly in terms of the timetables involved and possible additional price collection for participating countries.

The meeting provided Statistics NZ with the opportunity to discuss the PPP programme with other non-European countries' representatives along with representatives from the OECD and EuroStat, with the aim of contributing to the improvement of the programme.

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3. Nuts and Bolts

Clothing and footwear in the consumers price index

The clothing and footwear group had an expenditure weight of 4.48 percent in the consumers price index (CPI) at the June 2008 quarter. The sources and methods used to compile the clothing and footwear subgroups of the CPI are explained in Clothing and footwear in the CPI.

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4. On the horizon

Increases within the CPI ‘other private transport services' class

The consumers price index (CPI) ‘other private transport services' class contains such services as vehicle relicensing, driver licensing, warrants of fitness, road user charges, parking services, and driving tuition.

Prices for vehicle relicensing, administered by the NZ Transport Agency, rose on 1 July 2010, reflecting an increase of $30 in the ACC motor vehicle levy for a petrol car. These price increases will show in the September 2010 quarter CPI. Price rises for various vehicle types, such as petrol cars, non-petrol cars, and motorcycles with different size engines, rose by different amounts (in dollar and percentage terms), and the CPI will reflect this accordingly.

Prices for driver licensing also rose on 1 July.

The announced increase for road user charges, which took effect on 1 October 2010, will be reflected in the December 2010 quarter CPI.

Local authority rates in the CPI

The CPI local authority rates survey is conducted annually in the September quarter, for a sample of territorial authorities and regional councils. Rates are surveyed once a year because local authorities usually strike their rates annually. While normally any rate changes come into effect from 1 July, not all territorial authorities and regional councils set rates during the September quarter. The small number of rates struck after the September quarter, combined with the timing of survey returns and processing, result in rates changes being shown in both the September and December quarter CPIs. For the past five years, between 80 and 90 percent of the weight in the sample of local authority rates has been included in the September quarter CPI.

More information on local authority rates can be found in the October 2007 Price Index News article Local authority rates in the CPI.

Alcohol excise duty increase

The annual indexation adjustment of the excise duty on alcoholic drinks occurred on 1 July 2010. The adjustment was a 2.14 percent increase in the excise duty, based on the movement in the 'CPI less credit services' index from the March 2009 quarter to the March 2010 quarter.

The effect on retail prices should show fully in the CPI for the September 2010 quarter, depending on the timing of price increases in stores and the timing of price collection by Statistics NZ staff.

Update on GST increase

The rate of GST rose on 1 October 2010. October figures in the electronic card transactions release on 9 November will reflect the GST increase, and the food price index for October (released on 11 November) will include the initial impact on food prices of the rise in GST. The broader impact on prices will be shown in the consumers price index (CPI) for the December quarter, to be released on 20 January 2011.

This Statistics NZ media release indicates the direct impact the rise would have on the CPI if all other things remained equal.

Statistics NZ has also prepared an article on how the introduction of GST in 1986 and the GST increase in 1989 affected retail sales figures.

Effect of Christchurch earthquakes on price indexes

The Christchurch earthquakes on and after 4 September 2010 affected Statistics NZ's collection of food prices in September. While most prices were still available, a greater-than-usual number were not. The disruption was also felt in other South Island cities, such as Dunedin. The September 2010 month food price index and the September 2010 quarter consumers price index will both be affected.

Prices collected for the labour cost index, producers price index, and capital goods price index were not materially affected as they were collected as at the middle of August for the September quarter. The overseas trade price and volume indexes are based on NZ Customs Service data relating to the full September quarter, so any disruption to exports or imports in September would be reflected in the September quarter indexes.

Alternative way to access Price Index News articles

Four links are available on the Price Index News home page:

These links will take you to an archive of articles from past issues of the newsletter. To find previous CPI ‘Nuts and bolts’ articles, click on the ‘Nuts and bolts’ link, then click ‘CPI sources and methods’. The articles are divided according to the 11 CPI groups.

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5. Development updates

Update on the business price index redevelopment and ANZSIC 2006 project

The capital goods price index (CGPI) asset type indexes, and the producers price index (PPI) working-level industry output indexes have all been redeveloped. The remaining CGPI asset type and PPI output industry redevelopments were implemented in the March 2010 quarter.

The PPI industry inputs indexes will be redeveloped as part of a project to update the industry classification used in the PPI. Work is currently underway to update the 1996 Australian and New Zealand Standard Industrial Classification (ANZSIC96) with the 2006 version of the classification for the PPI. We will provide quarterly updates on progress towards implementation, which will be for the March 2011 quarter in May 2011. For more detail, please see the ANZSIC06 information page.

Labour cost index review

Statistics NZ is undertaking a labour cost index (LCI) review project. The LCI measures changes in wage rates and non-wage labour costs.

The reweight will ensure the LCI continues to reflect the current labour market. The 2006 Census is a key data source for the reweight, as was the 2001 Census for the previous reweight in 2002. Other important data sources include: Statistics NZ's Business Frame (a register of New Zealand businesses), the Labour Cost Survey, and the Quarterly Employment Survey (QES).

The new expenditure weights are being assigned at the sector of ownership (based on whether the organisation is owned privately, by central government, or by local government), by industry group, and occupation level. The expenditure weights will reflect both the number of jobs filled by paid employees, and the pay rates for those jobs.

The reweighted salary and wage rates indexes for the September 2008 quarter were released in November 2008. The reweighted indexes of non-wage labour costs for the June 2009 quarter were published on 22 October 2009. These reweights were based on the existing LCI sample, and the existing industry and occupation groups.

Following the reweight using the existing classifications, more up-to-date industry (Australian and New Zealand Standard Industrial Classification 2006 (ANZSIC06)), and occupation (Australian and New Zealand Standard Classification of Occupations (ANZSCO)) classifications have been implemented in the LCI. These new industry and occupation classifications have different structures from the existing classifications used in the LCI. First LCI results using the new classifications were included in the September 2009 quarter salary and wage rates information release, published on 3 November 2009.

The LCI has been re-expressed on a June 2009 quarter base (=1000). The sample of surveyed job descriptions has been refreshed to better reflect the structure of the ANZSIC06 classification. The ANZSIC06-based industry and ANZSCO-based occupation indexes have not been backcast before the June 2009 quarter. However, the LCI (salary and wage rates) series were published on the old industry and occupation classifications until the June 2010 quarter, providing a year-long overlap. For more information, see the technical notes section of the Labour Cost Index (Salary and wage rates): September 2009 quarter information release.

Recent work on the review has focused on finalising the reweight of the non-wage labour costs under ANZSIC06, which will be published on 22 October 2010. The results will be released under both the old and new industry classifications, ANZSIC96 and ANZSIC06, providing a one-year overlap. From the June 2011 quarter onwards, only the new ANZSIC06 classification will be released.

For more information, please contact:

Daniel Hubbard
Wellington
04 931 4600
Email: info@stats.govt.nz

Upcoming consumers price index review

A review of the consumers price index (CPI) will be implemented when the September 2011 quarter index is released in October 2011. The focus of this review will be reselecting and reweighting the basket of representative goods and services used to calculate the CPI. The review will make use of information from the 2009/10 Household Economic Survey (HES) and other sources. The 2009/10 HES ran from July 2009 to June 2010 to collect information on spending by a sample of households. The previous CPI review was implemented when the September 2008 quarter was released in October 2008 and used information from the 2006/07 HES.

This review will help ensure that the CPI basket of goods and services remains representative of New Zealand private resident household purchases.

For more information on the 2011 CPI review, please contact:

Peter Campion
Wellington
04 931 4600
Email: info@stats.govt.nz

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6. Making contact

In future issues of Price Index News, we will use this section to let you know about:

  • plans to consult users of price index statistics
  • the availability of consultation papers
  • how users of price index statistics can participate in the consultation process
  • decisions made after users have been consulted.

If you would like to discuss any aspect of price index statistics, we would like to hear from you. Contact names are at the end of the 'Commentary' section in each Hot Off the Press information release. You can also contact:

  • Chris Pike (Manager – Prices)
  • Litia Tapu (Project manager – Business, Labour, and Overseas Trade Price Index outputs)
  • Daniel Griffiths (Project manager – Consumers Price Index outputs)
  • Peter Campion (Acting project manager – Index development).

Wellington 04 931 4600
Email: info@stats.govt.nz

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7. Release dates

Price index release calendar for the next three months

M = Media conference

October 2010

Wed 13 Food Price Index: September 2010
Mon 18 M Consumers Price Index: September 2010 quarter

Fri

22 Labour Cost Index (All Labour Costs): June 2010 quarter

November 2010

Tue 2 M Labour Cost Index (Salary and Wage Rates): September 2010 quarter
Thu 11 Food Price Index: October 2010
Thu 18 M Producers Price Index: September 2010 quarter
M Capital Goods Price Index: September 2010 quarter

December 2010

Fri 10 M Overseas Trade Indexes (Prices): September 2010 quarter (provisional)
M Overseas Trade Indexes (Volumes): September 2010 quarter (provisional)
Mon 13 Food Price Index: November 2010
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