Close
 

New Zealand's Consumer Price index – is it accurate enough?

  • News
  • August 20, 2015
  • Elly Strang
New Zealand's Consumer Price index – is it accurate enough?

The CPI has been around since 1914, and a basket that would’ve cost  £1 in 1914 would now amount to about $151.

Published quarterly (except for food prices), the CPI is intended to measure price changes in products over time and monitor New Zealand’s economic performance.

Infometrics senior economist Benje Patterson says the way New Zealand’s CPI is calculated adheres to international best practice.

“The CPI essentially measures pricing of a basket of goods that, from surveys and analysis of household spending patterns, are deemed to be representative of the typical household,” Patterson says.

But just how precise is it? Does it provide an overall reflection of New Zealand’s pricing?

A Statistics New Zealand spokesperson says the CPI is reviewed every three years to ensure accuracy, as household spending patterns differ over time as lifestyles, tastes and incomes change.

"Because of these changes, the CPI needs to be reviewed regularly to ensure it continues to reflect up-to-date household spending patterns."

As recently as last year, the CPI was reviewed and three changes were made.

Fifteen new items were added, including cider, property valuation services, packaged leaf salad, frozen prawns, plywood, spades, and pets.

 Twelve items were removed, including video cameras, burglar alarms, video cameras, car stereos and ebook readers.

These selections have been made over time to reflect changes in consumer spending, and what items fall in and out of flavour.

This was the case when washing boards and clothes wringers were added in 1924, but taken off in 1949 when washing machines were added.

Another example is hair perms, which were all the rage in 1949 but were taken off in 2006.

As well as this, it was decided items would no longer be priced from Timaru, Wanganui and Rotorua as a cost cutting measure to fund new price indexes.

In the last CPI, Statistics New Zealand collected around 100,000 prices from 2800 retail stores and 2300 other businesses or landlords from 12 areas: Whangarei, Auckland, Hamilton, Tauranga, Napier-Hastings, New Plymouth, Palmerston North, Wellington, Nelson, Christchurch, Dunedin, and Invercargill.

Statistics New Zealand also changed the way it collects prices by introducing handheld tablets for interviewers this year.

Pricing is now done electronically for fruit and vegetables and fuel data, rather than using paper and pens.

Despite adhering to international best practices, there are some aspects of this that pose problems, as the CPI is based on averages.

The most commonly mentioned problems with the CPI include substitution bias, new items added to the basket of goods, and quality changes in goods.

Patterson says though the CPI is reviewed and updated to reflect changes in tastes and availability, the basket of goods in the CPI is not good at showing differences between groups of people.

“For example, a family with two children in Auckland will consume a different bundle of goods to a single person flatting in Wellington, or an elderly couple who have retired to Hawke’s Bay,” he says.

Considering the category sub-indices is more accurate, he says, as you can analyse the price of things in detail, from housing to meat.

Patterson says the CPI is good at showing the average price of things throughout New Zealand, but doesn’t let economists identify specific regional variations in pricing.

“However, this is generally not a huge problem for many consumer goods,” he says. 

“Although differences might persist, generally speaking market forces and the prevalence of nationwide retail chains ensure that pricing for most consumer goods move more or less in sync nationwide. 

“The cost of a pair of Nikes at Rebel Sport in Invercargill as it is in Hamilton.”

He says some goods, such as new housing, may have differences in pricing in different regions.

However, as long are people are aware of these differences between regions, he says it’s okay. 

​ ​

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

 

H&M's 2019 designer collab will be with Giambattista Valli

  • News
  • May 24, 2019
  • Sarah Dunn
H&M's 2019 designer collab will be with Giambattista Valli

H&M's designer collaborations are met with global consumer excitement. Last year, Moschino was the chosen brand, and for 2019, it's Paris-based Giambattista Valli.

Read more
 
 

Karen Walker brings back its preloved Dove Hospice pop-up

  • News
  • May 24, 2019
  • The Register team
Karen Walker brings back its preloved Dove Hospice pop-up

After a successful debut last year, Karen Walker is bringing back its Dove Hospice pop-up at the Newmarket 'Playpark' store. It will once again sell vintage hand-knitted items to fundraise for the hospice charity.

Read more
 
 

Countdown's Own wins April's Ad Impact award

  • News
  • May 23, 2019
  • StopPress Team
Countdown's Own wins April's Ad Impact award

With an April full of public holidays and potential long weekends, the month was a big and busy month for advertising. But Countdown's own-brand campaign surpassed the competition to be named the Colmar Brunton Ad Impact Award winner for April.

Read more
 

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

 
topics
Regional rollercoaster
What does retail look like in 2019 for ...
Concept to closet
Business coverage of New Zealand Fashion Week.
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
The future is bright
We spoke with four retailers in their twenties ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Sisterhood
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...
 

Kiwi fashion label Maggie Marilyn launches new website

  • News
  • May 23, 2019
  • The Register team
Kiwi fashion label Maggie Marilyn launches new website

The new website launched by New Zealand fashion label Maggie Marilyn prioritises transparency and sustainability.

Read more
 
 

Sharesies CEO Brooke Roberts talks what it takes to become a B Corp certified company

  • News
  • May 23, 2019
  • Courtney Devereux
Sharesies CEO Brooke Roberts talks what it takes to become a B Corp certified company

There’s a movement afoot globally to create more companies that balance purpose with profit and view business as a force for good. Called Certified B Corporations, companies that meet the highest standards of social and environmental performance, public transparency and legal accountability can become certified. As of April, Sharesies investment platform was the first financial company nationally to qualify for the B Corp certification, joining just 22 other New Zealand B Corp certified businesses. CEO Brooke Roberts talks us through the process, and the benefits for businesses in becoming certified.

Read more
 

The benefits of rewarding non-transactional activities

  • Opinion
  • May 23, 2019
  • Ros Netto
The benefits of rewarding non-transactional activities

Product and price is all very well, but retailers are increasingly seeking to avoid discounting by incentivising non-transactional behaviours instead. Ros Netto, consultant at Truth Customer Academy, shares some advice.

Read more
 
Next page
Results for
Topics
Jobs
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise
The Register

editor@theregister.co.nz

Content marketing/advertising? Email anita.hayhoe@icg.co.nz or call 022 639 3004

View Media Kit

}