CPI Data Collection 2011

Imputation Due to unavailability at the time of price collection, on average 1–2 percent of prices (not including seasonal items such as winter clothing) are imputed each quarter. This is often done by carrying forward the previous quarter’s price. Other imputation is done by applying the movements of similar categories of items. Expenditure weights Expenditure weights give the relative importance of the goods and services in the CPI basket. The CPI represents about $88.9 billion spent on goods and services by New Zealand households, at June 2011 quarter prices. Information on spending is sourced from the Household Economic Survey and other sources. New Zealand households spent $83.9 billion on goods and services in the year to June 2010 (which is the latest period available). Once the effect of price change between the year to June 2010 and the June 2011 quarter is taken into account (called ‘price updating’), spending on household goods and services measured in the CPI rises to $88.9 billion. The relative importance of the CPI subgroups shows that about $23.55 of every $100 spent by households on goods and services covered by the CPI is spent on housing and household utilities. About $18.79 is spent on food and about $15.12 is spent on transport. More information on the relative importance of CPI groups, subgroups, and classes is given in table 9 of this release. Population weights Population weights are used to allocate the national expenditure weights of goods and services to the CPI pricing centres. For example, the population weights ensure that a price change in Auckland (which has 33.43 percent of the population weight) would have about three times the effect on the national CPI than the same price change in Wellington (which has 11.07 percent of the population weight). The latest subnational population estimates, which are published annually, are used to calculate the population weights at each CPI review. Estimates at 30 June 2010 were the latest figures available at the time of the 2011 CPI review. This means that any potential population movements following the Christchurch earthquakes are not reflected in these weights. Population weights will be monitored, and if considered necessary, updated to maintain the accuracy of the CPI. Statistics NZ publishes CPI price indexes for five broad regions based on regional council area boundaries. These regions are Auckland, Wellington, rest of North Island, Canterbury, and rest of South Island. Outlet weights Outlets are given appropriate weights to reflect their relative importance in terms of household spending. Elementary aggregate formula Average prices in the CPI are called elementary aggregates. These elementary aggregates are the first level of the index aggregation. Regional elementary aggregates are calculated for each of the 15 pricing centres where price collection supports regional estimation. In other cases, regional elementary aggregates are calculated for five CPI broad regions (Auckland, Wellington, rest of North Island, Canterbury, rest of South Island) or, where prices do not support regional estimation, directly to a national elementary aggregate. Since the 2006 review of the CPI, the geometric mean, or Jevons, formula has been used to calculate the elementary aggregate indexes for items where outlet substitution is possible (eg for groceries and appliances). The 'ratio of arithmetic mean prices', or Dutot, formula is used for items where outlet substitution is not possible (eg local authority rates), where prices are subsidised and may fall to zero (eg GPs' fees), for fresh fruit and vegetables (as the first stage of aggregation is across both outlets within each region, and across weeks within each month), and where it is not currently practical to adopt the Jevons formula (eg when prices are aggregated directly to a national elementary aggregate, rather than aggregated to a regional level). Method of aggregating monthly collected prices from the monthly to the quarterly level Prices are collected monthly for the food group and a number of non-food items in the CPI, including electricity, cigarettes and tobacco, alcoholic drinks, and air travel. These prices are averaged over the quarter for inclusion in the CPI. The method for calculating these averages is to obtain monthly regional average prices for the item by outlet-weighting the prices collected at different outlets within each region. The monthly regional average prices are used to calculate quarterly regional average prices by weighting each monthly regional average price by the number of days in the month in which it was collected. This is called day weighting. All the regions are aggregated to obtain the national quarterly index by weighting together regional price movements from the base (ie June 2011) quarter to the current quarter, using the regional population weights. Petrol and diesel prices are collected weekly, usually on Fridays. The CPI petrol price index measures price changes of 91 octane petrol and 95/98 octane petrol. Within each CPI region, an average price per 10 litres of each fuel is calculated from the prices surveyed each week from individual service stations. Monthly regional average prices for each fuel are then calculated as simple averages of the averages for the weeks within each month. Quarterly regional average prices for each fuel are then calculated as the day-weighted averages of the averages for the three months within the quarter. Regional price movements from the base (ie June 2011) quarter to the current quarter are then weighted by the regional population-weighted share of the national expenditure weight, to calculate the national petrol and diesel price indexes for the current quarter. Since petrol and diesel prices are collected either 12 or 13 times within each quarter, a price change that occurs during the quarter is only partly reflected in that quarter, with the remainder being reflected in the following quarter. This is also the case for commodities that are priced monthly, such as cigarettes and tobacco. en-NZ