Consumers Price Index: December 2015 quarter Embargoed until 10:45am – 20 January 2016 Key facts Quarterly change In the December 2015 quarter compared with the September 2015 quarter:       The consumers price index (CPI) fell 0.5 percent to a level of 1198. Petrol prices fell (down 7.0 percent), making the largest downward contribution. Seasonally lower vegetable prices (down 17 percent) also fell. International airfares (up 5.5 percent), prices for newly built houses excluding land (up 1.2 percent), and rentals for housing (up 0.6 percent) rose. Prices for tradable goods and services fell 1.8 percent, while prices for non-tradable goods and services rose 0.5 percent. After seasonal adjustment, the CPI fell 0.2 percent. Annual change From the December 2014 quarter to the December 2015 quarter:      The CPI increased 0.1 percent (0.4 percent in the year to the September 2015 quarter). Rentals for housing (up 2.5 percent), prices for newly-built houses excluding land (up 5.0 percent), and local authority rates (up 6.2 percent) all increased. Lower petrol prices (down 8.1 percent) made the main downward contribution. Prices for non-tradable goods and services increased 1.8 percent. Prices of tradable goods and services decreased 2.1 percent. The CPI measures the rate of price change of goods and services purchased by New Zealand households. Statistics NZ visits 2,800 shops around New Zealand to collect prices for the CPI and check product sizes and features. Can an mars price index ?u arterly change Percent 1.5 t'iethi'? Dec?0'9 Dec?1 } Dec?11 DecLiz' decLiz-i decLii denim Enurce: Etatistics New Zealand C??Sll mers price index Annual change Percent [i Dec?05 Dec?Ci? Dec?1 Ei Dec??l1 Dec?12 Dec?1 Ei Dec?14 Dec??l 5 Enurcez Etatistics New Zealand Liz MacPherson, Government Statistician ISSN 1178-0452 20 January 2016 Commentary     Quarterly fall of 0.5 percent due to lower petrol and food prices Tradable deflation as New Zealand dollar rises Annual inflation at 0.1 percent is lowest since September 1999 CPI analytical series shows annual fall, excluding cigarettes and tobacco Quarterly fall of 0.5 percent due to lower petrol and food prices See 'Downloads' box for a one-page detailed summary of this quarter's CPI (PDF). The consumers price index (CPI) fell 0.5 percent in the December 2015 quarter, following a rise of 0.3 percent in the September 2015 quarter. Petrol and vegetable prices led the fall, but were partly offset by higher air fares and housing-related costs. The CPI often falls in December quarters, due to seasonally lower vegetable prices and seasonal discounting, but this is the largest fall since December 2008. After adjusting for seasonal effects, the CPI fell 0.2 percent. Petrol prices (down 7.0 percent) made the largest downward contribution. Excluding petrol, the CPI fell 0.2 percent in the latest quarter. The average price of 1 litre of 91 octane petrol in the December 2015 quarter was $1.84, compared with $1.98 in the September quarter. By the end of the December quarter, petrol pump prices were 4.5 percent below the average price for the quarter, and at 15 January were 5.6 percent below the average for the December quarter. If petrol pump prices stay at their 15 January level for the remainder of the March 2016 quarter, petrol would have a downward contribution to the CPI for the March 2016 quarter. 3 Vegetable prices fell 17 percent, influenced by seasonally lower prices for tomatoes and lettuce. After seasonal adjustment, vegetable prices showed no overall change in the December 2015 quarter. Milk, cheese, and eggs fell 3.7 percent, with fresh milk prices falling 6.5 percent in the quarter. Fresh milk prices were at their lowest level since the December 2009 quarter. Package holidays fell 5.5 percent, as the higher New Zealand dollar lowered the price of accommodation overseas. The fall in the latest quarter compares with a 7.5 percent rise in the September 2015 quarter, when the New Zealand dollar was falling. After seasonal adjustment, package holidays fell 9.2 percent. Prices rise for air fares and housing-related costs International air fares (up 5.5 percent) showed a seasonal price rise. After seasonal adjustment, they fell 3.5 percent. Prices of newly built houses (excluding land) rose 1.2 percent nationally, with rises of 1.5 percent in Auckland and 1.0 percent in Canterbury. Auckland's rise follows a 2.0 percent rise in the September 2015 quarter. Excluding Auckland, prices for newly built houses were up 1.1 percent. Rentals for housing rose 0.6 percent, with Auckland up 0.8 percent and Canterbury showing no change. Excluding rentals, the CPI fell 0.6 percent in the December 2015 quarter. Domestic air fares rose 7.9 percent, influenced by higher demand leading up to the holiday period. 4 Tradable deflation as New Zealand dollar rises Tradables fell 1.8 percent in the December 2015 quarter, with the stronger New Zealand dollar lowering prices for petrol and vegetables. These falls were partly offset by higher prices for 5 international air fares, fruit, and furniture and furnishings. Similar large falls occurred in the March 2015 quarter (down 1.9 percent) and the December 2008 quarter (down 2.1 percent). Non-tradables rose 0.5 percent in the latest quarter, with higher prices for newly built houses excluding land, housing rentals, and domestic air fares. These were partly offset by lower prices for meat and poultry. Annual inflation at 0.1 percent is lowest since September 1999 In the year to the December 2015 quarter, the CPI increased 0.1 percent. This follows a 0.4 percent increase in the year to the September 2015 quarter. Housing rentals (up 2.5 percent nationally and 3.3 in Auckland), prices for newly built houses excluding land (up 5.0 percent nationally and 7.2 percent in Auckland), and local authority rates (up 6.2 percent) all increased in the year to the December 2015 quarter. Annual non-tradable inflation was 1.8 percent. Cigarettes and tobacco (up 12 percent) made the most significant upward contribution to the latest annual increase, influenced by the excise duty rise in January 2015. The increase was partly offset by lower prices for other private transport services (down 24 percent) and telecommunication services (down 3.1 percent). Non-tradables excluding government charges and tobacco rose 1.8 percent in the year to the December 2015 quarter, compared with 1.6 percent in the year to the September 2015 and 1.5 percent in the year to the June 2015 quarters. The tradable component decreased 2.1 percent in the latest year. Lower prices for petrol (down 8.1 percent), milk, cheese, and eggs (down 8.7 percent), and international air fares (down 8.1 percent) made the main downward contributions. The main upward contributions came from higher prices for fruit and for furniture and furnishings. 6 See CPI visualisation – an interactive tool to help you explore the changes in the prices and relative importance of the goods and services in the CPI basket. See CPI tradables and non-tradables visualisation tool for further information. CPI analytical series shows annual fall, excluding cigarettes and tobacco The CPI excluding cigarettes and tobacco decreased 0.3 percent, while the CPI excluding petrol increased 0.5 percent in the year to the December 2015 quarter. Excluding the housing and household utilities group, the CPI decreased 0.8 percent in the year to the December 2015 quarter. The trimmed mean measures – which exclude extreme price rises and falls – had quarterly changes ranging from -0.4 percent to 0.1 percent in the December 2015 quarter. This indicates the ‘underlying’ price change (ie excluding extreme price rises and falls) was higher than the all groups movement. 7 Further information is included in table 13 of this release. For more detailed data on the CPI see the Excel tables in the ‘Downloads’ box. 8 Definitions About the consumers price index The consumers price index (CPI) measures the changing price of a fixed basket of goods and services purchased by New Zealand households. The selection and relative importance of the goods and services in the CPI basket represents the overall expenditure pattern of New Zealand households. The aim of the CPI is to measure price changes of the same sample of products at each outlet over time. When there is a change in the size or quality of any of the goods or services in the basket, we make an adjustment to ensure that the price change shown in the CPI is not affected by the change in size or quality. The CPI is used to help set monetary policy and for monitoring economic performance. The government uses the CPI to adjust New Zealand Superannuation and unemployment benefit payments once a year, to help ensure that these payments maintain their purchasing power. Employers and employees use the CPI in wage negotiations. The CPI is published quarterly. The food group is the only CPI group for which we publish an index each month. Consumers price index review: 2014 has a list of the representative goods and services monitored in the CPI basket. CPI sources and methods articles present the sources and methods used to compile various parts of the CPI basket of goods and services. More definitions Price index: measures the change in price between time periods for a given set of goods and services. It summarises a set of prices for a variety of goods and services collected from a number of outlets. Index reference period: the benchmark to which prices in other periods are compared (eg if the index number in a later period is 1150, prices have increased by 15.0 percent since the index reference period). Prices for later periods can also be compared in similar fashion. The CPI has an index reference period of the June 2006 quarter (=1000). Index points contributions: items mentioned in this release are often those that made a large contribution to the overall movement in the CPI. An item's contribution is a combination of its weight in the index (ie its relative importance, based on its share of household spending on goods and services covered by the CPI) and the magnitude of price movement. For example, for two items recording the same percentage rise in price, the item with the larger weight in the CPI will make a larger contribution to the overall movement. This contribution is also referred to as points (or index points) contribution. Percentage points contribution: measures the contribution of each group, subgroup, and class to the overall quarterly and annual percentage change in the all groups CPI. For any particular level of the CPI classification, such as the group level, percentage points contributions add to the overall percentage change in the all groups CPI. 9 Percentage contribution: measures the relative contribution of each group, subgroup, and class to the overall quarterly and annual index points (or percentage) change in the all groups CPI. For any particular level of the CPI classification, such as the group level, percentage contributions add to 100 percent. Tradable and non-tradable component series: the tradable component series contains goods and services that are imported or in competition with foreign goods, either in domestic or foreign markets. Movements in the tradables component (tradable inflation) demonstrate how international price movements and exchange rates are affecting consumer prices. The non-tradable series contains goods and services that do not face foreign competition. It shows how domestic demand and supply conditions are affecting consumer prices. Analytical measures of inflation: over the long term, the CPI captures the broad pattern of price change, but can be influenced by one-off events when analysing price change over shorter timeframes. To remove such influences, we calculate analytical measures of price change in an attempt to isolate the more persistent – or underlying – component of general price-level changes. Several analytical measures are constructed to give a good guide to underlying pricelevel change. These are a range of 'trimmed means' and a range of 'weighted percentiles' including a weighted median. We give trimmed means and weighted percentiles in table 11 and table 12 of this release. Trimmed means: exclude the influence of the largest price increases and decreases in the CPI. We do this at the item level of about 700 goods and services in the CPI basket (eg 91 octane petrol or strawberries). The trimmed means progressively remove the influence of the largest increases and decreases. Weighted percentiles: highlight the movement of lower-level indexes at points in the distribution of price changes for a particular time period. Seasonally adjusted series: Seasonal adjustment aims to eliminate the impact of regular seasonal events (such as annual cycles in fruit and vegetable production, winter, or preChristmas shopping) on time series. Seasonal patterns can obscure the underlying behaviour of the series. See the Excel tables in the 'Downloads' box for the seasonally adjusted series. You can also extract the seasonally adjusted series from Infoshare. 10 Related links Next release Consumers Price Index: March 2016 quarter will be released on 18 April 2016. Subscribe to our information releases, including this one, by completing the online subscription form. The release calendar lists all information releases by date of release. Past releases Consumers Price Index – information releases has links to past releases. Related information Food price index measures the price change of food goods and services purchased by New Zealand households. CPI sources and methods articles present information about the basket of goods and services, and the sources and methods used to compile individual components of the CPI. Electronic Card Transactions measure the number and value of electronic card transactions with New Zealand-based merchants. Retail Trade Survey measures the sales of a range of household and personal goods and services. 11 Data quality Period-specific information This section has information that has changed since the last release.    Reference period Response rates Sample size General information This section has information that does not generally change between releases.                 Imputation Review of the CPI Reweighted CPI food group Impact of GST rise on the CPI Care required when using the CPI to adjust monetary values Reference population Expenditure weights Collection methods Pricing frequency Accuracy of the data Key concepts Consistency with other periods or datasets Interpreting the data Timing of published data CPI rolling review of retail outlets More information Period-specific information Reference period We collected prices during the period October to December 2015. Statistics NZ staff visited retail outlets during 2–20 November. We collect prices for food and non-food groceries each month, usually between the 8th and 17th of the month. Petrol, fresh fruit, and fresh vegetable prices are collected weekly. We collected quarterly postal survey prices at 15 November. Response rates Postal Target: 93 percent Achieved: 94.8 percent Local authority rates Local authorities set their rates annually, and these are mainly shown in the September quarter CPI. The September 2015 quarter's movement reflected 91 percent of the sample weight, with the remainder in the latest quarter's CPI. Price movements on about 92 percent of the sample 12 weight were included in the September 2014 quarter and 82 percent in the September 2013 quarter. Field collection Statistics NZ price collectors gather prices directly from retail outlets. Sample size We collected about 100,000 prices from about 2,800 retail outlets and 2,300 other businesses and landlords. Vehicle relicensing fees On 1 July 2015 vehicle relicensing fees changed, as a result of changes to the way ACC calculates levies for light vehicles. Levies are now based on how well a vehicle protects its passengers and others on the road if it’s involved in a crash. Vehicle relicensing fees represented just under three-fifths of the weight of the ‘other private transport services’ class at the June 2014 quarter. To incorporate the lower vehicle relicensing fees into the CPI, we have used information on the number of private passenger cars/vans that have registered to each of the new ACC levy bands over the September 2015 quarter. This information was provided by the New Zealand Transport Agency. The resulting calculation takes into account the relative importance of each of the levy tiers for petrol and non-petrol vehicles. General information Imputation Due to unavailability at the time of price collection, on average we impute 1–2 percent of prices (not including seasonal items such as winter clothing) each quarter. We often do this by carrying forward the previous quarter’s price. Other imputation we do is to apply the movements of similar categories of items. Review of the CPI Reviews of the CPI are undertaken every three years. We implemented the latest review when the September 2014 CPI was published. The review involved reselecting the basket of representative goods and services, updating the new national expenditure weights, and updating regional expenditure weights. Consumers price index review: 2014 has more information. Reweighted CPI food group The food group of the CPI showed no change from the June 2014 quarter to the September 2014 quarter. This compares with a 0.4 percent rise obtained when we average the food price index (FPI) across the three months within each of the June and September 2014 quarters. This difference of 0.4 of a percentage point compares with smaller differences when we implemented CPI basket and weight reviews in 2011 and 2008. 13 Factors that contribute to these differences relate to when we introduced basket and weight changes. For the 2014 CPI review, we implemented basket changes and updated expenditure weights for the June 2014 month in the July 2014 FPI. FPI movements up to and including the June 2014 month were based on the 2011 basket and weights. In contrast, we used the 2014 basket and weights for all months of the June 2014 quarter for the food group of the CPI. For example, we added packaged leaf salad to the 2014 basket; it now has about 40 percent of the weight previously allocated to lettuce. Lettuce prices rose strongly in May (which contributed to the FPI) and from the June quarter to the September quarter, whereas packaged leaf salad prices were relatively flat in May (which didn't contribute to the FPI) and from the June quarter to the September quarter. This contributed to the lower movement for the CPI food group in the September 2014 quarter than for the FPI. With the 2014 CPI review, we have also moved to regional weights based on spending in five broad regions. Before the review, we used regional population shares. The FPI used 2011 regional population shares up to and including the June 2014 month, whereas we used the 2014 regional spending shares for all months of the June 2014 quarter for the food group of the CPI. For example, Auckland now has a higher share (35.5 percent) of spending on food than its 2011 population share (33.4 percent), and there was a lower-than-average change for the Auckland food group in the September 2014 quarter (down 0.2 percent). The reweighted CPI food group provides the best estimate of change in food prices from the June 2014 quarter to the September 2014 quarter. This is because the reweighted CPI food group gives more new information on spending patterns than the FPI during this transitional quarter – from the 2011 basket and weights to the 2014 basket and weights. The food group of the CPI showed a 0.7 percent from the September 2014 quarter to the December 2014 quarter – the same as when we average the FPI across the three months within each of the September and December 2014 quarters. Impact of GST rise on the CPI GST rose from 12.5 percent to 15 percent on 1 October 2010. However, the rise in GST was not immediately reflected in the prices of some seasonally available goods and services in the CPI basket – it was reflected when we next collected prices for these items. These items make up about 3 percent of expenditure on goods and services in the CPI. Of this 3 percent, we saw nearly half reflected in the March 2011 quarter CPI, nearly half in the June 2011 quarter, and the remainder in the September 2011 quarter. The table below shows what the quarterly and annual percentage changes would have been if prices collected for the December 2010, and March, June, and September 2011 quarters had been processed with GST of 12.5 percent for goods and services that are subject to GST. The CPI would have risen 0.4 percent in the September 2011 quarter, and 2.5 percent for the year to the September 2011 quarter. 14 CPI processed with GST at 12.5 percent Quarter Percentage change from previous quarter Dec 2010 Mar 2011 Jun 2011 Sep 2011 0.5 0.8 0.9 0.4 Percentage change from same quarter of previous year 2.1 2.6 3.3 2.5 Adjusted index number 1116 1125 1135 1139 Care required when using CPI to adjust monetary values The CPI is used to adjust monetary values, such as those in legislation and contracts. Care is required when using the CPI to adjust monetary values during the year-long period in which the CPI reflects the rise in GST. Some goods and services in the CPI are not subject to GST, some are zero-rated for GST purposes (meaning the applicable rate of GST is zero), and the rise in GST was not immediately reflected for all goods and services in the CPI that are subject to GST. Special care is required when the monetary values being adjusted exclude GST. It would not be appropriate to adjust prices or monetary values that exclude GST (but which are subject to GST) by the CPI movement during the period in which the CPI reflects the increase in GST. Doing this would mean the GST increase is counted twice. Another common use of the CPI is to adjust housing rentals, which are not subject to GST. Using the CPI to adjust rental values during the period in which the GST increase is reflected in the CPI would mean the adjustments would include the overall effect of the GST increase on the CPI. Reference population The reference population of the CPI covers approximately 98 percent of the usually-resident New Zealand population living in permanent dwellings. Expenditure weights Expenditure weights give the relative importance of the goods and services in the CPI basket. We update expenditure weights every three years as part of regular CPI reviews. The current set of weights are derived from the 2012/13 Household Economic Survey (HES) and other sources. CPI weights are based on household spending for the year to June 2013 (the ‘weight reference period’), expressed in June 2014 quarter prices (the ‘price reference period’). The relative importance of the CPI groups shows that $24.23 of every $100 households spend on goods and services in the CPI is spent on housing and household utilities, $18.84 is spent on food, and $14.97 is spent on transport. See table 9 of this release for more information on the relative importance of FPI groups, subgroups, and classes. 15 Collection methods We collect prices used in the CPI through three main methods: visiting retail outlets, postal surveys, and the Internet. Our price collectors personally visit over 2,800 different shops in 12 pricing centres throughout the country: Whangarei, Auckland, Hamilton, Tauranga, Napier-Hastings, New Plymouth, Palmerston North, Wellington, Nelson, Christchurch, Dunedin, and Invercargill. Before 1 July 2014, we also collected CPI prices in Rotorua, Wanganui, and Timaru. However, in line with recommendation 7 of the CPI Advisory Committee 2013, we stopped collecting prices in these three regions, so we could divert the cost of collection towards funding CPI-related initiatives such as household living-costs price indexes and seasonally adjusted analytical CPI series. Price change for these regions is now directly represented by Tauranga, Palmerston North, and Christchurch, respectively. We also send out about 70 different postal surveys each month, quarter, or year. These surveys are used primarily to collect prices for services, such as electricity and bus fares. The surveys are sent directly to service providers. In some cases, for sampling and collection reasons, we aggregate these prices to the national level or to broad regions such as Auckland, Wellington, Canterbury, rest of North Island, and rest of South Island. Items where we use movements in the broad regions include: the purchase of second-hand cars; purchase of new housing; and rentals for housing. In these cases, we use price movements for the five broad regions for the corresponding 12 pricing centres. The types of outlets visited include supermarkets, department stores, and appliance stores. We collect prices weekly for motor fuels and for fresh fruit and vegetables; monthly for food, non-food groceries, alcoholic beverages, and newspapers; and quarterly for other goods and services. We sent postal surveys to service providers who set prices nationally or with little variation according to location, such as prices for telephone homeline rental. Prices for products and services (such as digital downloads, package holidays, and air fares) are also collected each month or quarter from the Internet. Pricing frequency Whether we collect prices weekly, monthly, quarterly, or annually, depends on the expected frequency of price changes the goods or service exhibit. Accuracy of the data Elementary aggregate formula Average prices in the CPI are called elementary aggregates. These elementary aggregates are the first level of the index aggregation. We calculate regional elementary aggregates for each of the 12 pricing centres where price collection supports regional estimation. In other cases, we calculate regional elementary aggregates 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, we have used the geometric mean, or Jevons, formula to calculate the elementary aggregate indexes for items where outlet substitution is possible (eg for groceries and appliances). 16 We use the 'ratio of arithmetic mean prices', or Dutot, formula 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). Information about the consumers price index has more information on the Jevons and Dutot formulae. Method of aggregating monthly collected prices from monthly to 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. To include them in the CPI, we average these prices over the quarter. The method we use to calculate these averages is to obtain monthly regional average prices for the item – by outlet-weighting the prices collected at different outlets within each region. We use the monthly regional average prices 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. We aggregate all the regions to obtain the national quarterly index by weighting together regional price movements from the base (ie June 2014) quarter to the current quarter, using the regional expenditure weights. We collect petrol and diesel prices 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, we calculate an average price per 10 litres of each fuel from the prices surveyed each week at individual service stations. Monthly regional average prices for each fuel are then calculated as simple averages of the averages for the weeks in each month. We calculate quarterly regional average prices for each fuel as the day-weighted averages of the averages for the three months in the quarter. We then weight regional price movements from the base (ie June 2014) quarter to the current quarter 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 we collect petrol and diesel prices either 12 or 13 times within each quarter, a price change during the quarter is only partly reflected in that quarter, with the remainder being reflected in the following quarter. This also occurs for commodities that are priced monthly, such as cigarettes and tobacco. Regional expenditure weights From the September 2014 quarter CPI onwards, we weight regional price change using regional expenditure weights for the five broad regions (Auckland, Wellington, rest of North Island, Canterbury, and rest of South Island). Regional expenditure weights use expenditure in each region to weight regional price change. This ensures that price change in regions where households spend more per person on a particular item relative to other regions (eg Auckland has 33.37 percent of the population and a CPI regional expenditure weight of 34.87 percent) has more influence on the combined national price change for that item. For broad regions with multiple pricing centres (ie rest of North Island and rest of South Island), we use population shares to allocate the regional expenditure weight to the pricing centres. 17 Previously, we used national expenditure weights in each of the (then) 15 regional pricing centres, weighted by the centre’s population share. This change was recommended by the 2013 CPI Advisory Committee (recommendation 6) and aligns with international best practice. We calculate regional expenditure weights as proportions of national expenditure (eg 35.50 percent of food expenditure is in the Auckland region) for each CPI class or section (the lowest published level) using HES regional expenditure. We apply class/section level proportions to the individual items within that class or section (eg the regional proportions for fruit are applied to national expenditure on each fruit item) to derive regional expenditure on each individual item (eg spending on apples in Auckland). Regional expenditure is then expressed in June 2014 prices for the respective region (eg ‘apple expenditure in Auckland’ is expressed in June 2014 apple prices collected in Auckland). The group level regional weights are calculated by aggregating all food expenditure in each broad region. We publish CPIs for the five broad regions based on regional council area boundaries. These indexes are available from Infoshare. For the 2014 regional expenditure weights for the five broad regions, see table 7 of this release. Outlet weights We give outlets appropriate weights to reflect their relative importance in terms of household spending. 'On special' prices We include items that are 'on special' in the CPI at the price levels we observe when collecting prices. Quantity specials (eg 15-pack of beer at a cheaper shelf price than the 12-pack) are also considered where appropriate (as the price per bottle for the special is lower). Key concepts Standard and non-standard series CPI series that contribute to the hierarchical structure of the overall CPI are known as standard series. For example, the clothing index, combined with the footwear index, contributes to the clothing and footwear index, which in turn contributes to the all groups index. Components of this pyramid-like structure are known as standard index series. In addition, we publish a selection of non-standard series in the information release tables; additional series are available from Infoshare. Examples of these non-standard series include:    all groups CPI less each of the 11 CPI groups all groups CPI plus interest interest. The CPI is published at the following levels: group, subgroup, and class – all at the national level. We also publish selected sections within the food group. Tradable and non-tradable non-standard series The tradable and non-tradable component series that appear in table 1 allow users to decompose CPI goods and services into two components: one contains goods and services that are imported or in competition with foreign goods, either in domestic or foreign markets 18 tradables); the other contains goods and services that do not face foreign competition (nontradables). Movements in the tradables component (tradable inflation) demonstrate how international price movements and exchange rates are affecting consumer prices. The non-tradables component shows how domestic demand and supply conditions are affecting consumer prices. The June 2014 quarter expenditure weight of the tradables component is 43.59 percent, compared with 44.01 percent in 2011. The June 2014 quarter weight of non-tradables is 56.41 percent, compared with 55.99 percent in 2011. Consumers price index review: 2014 (table 6) has the June 2014 quarter tradable/non-tradable weights for each group, subgroup, and class. Consumers price index tradable and non-tradable series (published 2004) presents the methodology we use to categorise the tradable and non-tradable series. Trend measures of price-level change Over the long term, the CPI captures the broad pattern of price change, but it can be influenced by one-off events when analysing price change over shorter timeframes (eg a supply disturbance affecting petrol prices). To remove such influences, we calculate analytical measures of price change in an attempt to isolate the more persistent – or underlying – component of general pricelevel changes. We construct several analytical measures to give a good guide to underlying price-level change. These are a range of 'trimmed means' and a range of 'weighted percentiles', including a weighted median. See tables 11 and 12 of this release for trimmed means and weighted percentiles. Trimmed means exclude the influence of the largest increases and decreases in the CPI. We do this at the item level of about 700 goods and services in the CPI basket (eg 91 octane petrol or strawberries). The trimmed means progressively remove the influence of the largest increases and decreases. Weighted percentiles highlight the movement of lower-level indexes at points in the distribution of price changes for a particular time period. Trend measures of price level change (published 2003) has detailed information on our methodology and how we compile trimmed means and weighted medians. The central and local government charges index, which appears in tables 3.01, 3.02, and 3.03, made up 10.78 percent of the CPI at the June 2014 quarter. The central and local government charges non-standard series includes items such as:          Housing New Zealand and local authority rentals land transfer registration fees local authority rates water supply and part of refuse disposal, electricity prescription charges and oral contraception, general practitioner fees vehicle relicensing fees, road user charges, driver licensing fees postage State and integrated schools, tertiary education, other education cheque duty, and official passports, licences and certificates. 19 The goods and services component series that appear in tables 3.01, 3.02, and 3.03 allow customers to decompose the CPI into its goods and services components, respectively. The goods component made up 60.44 percent, and the services component 39.56 percent at the June 2014 quarter. The goods component comprises:           the food group (except restaurant meals) alcoholic beverages and tobacco group clothing and footwear group (except clothing services) purchase of new housing, property maintenance materials, water supply, and household energy household contents and services group (except repair and hire of household appliances, hire of major tools and equipment, and other household services) medical products, appliances and equipment; dentures purchase of vehicles, vehicle parts and accessories, petrol, other vehicle fuels and lubricants telecommunication equipment recreation and culture group (except recreational and cultural services, accommodation services, and package holidays) miscellaneous goods and services group (except hairdressing and personal grooming services, jewellery and watch repair, insurance, credit services, and other miscellaneous services). The services component comprises all items not included in the goods component. Consistency with other periods or datasets Index reference period All CPI indexes have an index reference period of the June 2006 quarter (=1000), except where we added additional indexes in subsequent CPI reviews. Additions to the CPI basket at the June 2008 quarter resulted in our publishing two new indexes at the class level of the New Zealand Household Expenditure Classification (NZHEC). These classes are clothing accessories, and other education. Before the 2008 review, we allocated expenditure on goods and services within these two classes to other apparel and education items, respectively. There was also one new subgroup, for other education. As the two classes and one subgroup were new, they are expressed on the June 2008 quarter (=1000). Similarly, we added other property-related services to the CPI in 2011. The ‘other property related services’ class is expressed on the June 2011 quarter (=1000). We did not add or discontinue any class or subgroup level series in the CPI as part of the 2014 review. However, the ‘pet-related products’ class was renamed ‘pets and pet-related products’ due to pets being added to the CPI scope. Reconciling the FPI and food group of the CPI When comparing the FPI and the food group of the CPI, strictly speaking, the quarterly food group index number is not the average of the relevant three monthly FPI numbers. There are some technical differences between the monthly FPI indexes and quarterly indexes. 20 Food prices in the consumers price index and food price index (published 2008) has more information. Treatment of fresh fruit and fresh vegetables – removal of seasonal adjustment Until the June 2006 quarter, we adjusted fresh fruit and fresh vegetable items that exhibited a seasonal pattern – to remove the effect of normal seasonal change. This treatment reduced the influence of normal seasonal price fluctuations, but did not completely eliminate the effects of seasonal fluctuations if shifts in seasonal patterns occurred. From the September 2006 quarter onwards, the CPI incorporates seasonally unadjusted prices for fresh fruit and fresh vegetables. This is in line with a recommendation the 2004 CPI Revision Advisory Committee made. The ongoing, fully unadjusted CPI is linked at the June 2006 quarter to the previously published CPI, which is partly seasonally adjusted. As such, annual movements calculated over the annual period encompassing the June 2006 quarter are based on fully unadjusted index numbers for the latest quarter, compared with partly adjusted index numbers for the same quarter of the previous year. However, analytical time series provided annual movements on a fully unadjusted basis during the year-long transition of the official CPI. During this time, we based annual movements on fully unadjusted index numbers for the latest quarter, compared with partly adjusted index numbers for the same quarter of the previous year. Availability of regional indexes We publish indexes for five broad regions: Auckland, Wellington, Canterbury (Christchurch and Timaru until the September 2014 quarter, then Christchurch only), rest of North Island, and rest of South Island. We consider these series to be fit for purpose and do not make significant use of national pricing indicators in compiling them. Until the June 2006 quarter, we published indexes for 15 regional pricing centres. These series were not considered fit for purpose, as we used price movements from national or broad-region price collection to compile them. We calculate series for the 12 regional price centres (15 until the June 2014 quarter), which are only available on request. Interpreting the data Seasonal adjustment The 2013 CPI Advisory Committee recommended we add analytical seasonally adjusted series to our publications. We are seasonally adjusting the CPI and FPI at the all groups, group, subgroup, and class levels. The headline CPI will remain unadjusted. We have seasonally adjusted using direct adjustment rather than indirect since this produced better quality statistics. Indirect seasonal adjustment occurs when individual component series of the main aggregate series are seasonally adjusted, then aggregated to derive totals. For example, an indirect seasonally adjusted fruit series would be compiled by adding all the seasonally adjusted series (for apples, pears, kiwifruit, etc) together. Direct seasonal adjustment occurs when seasonally adjustment is done at the aggregate level, independently of seasonally adjusting the components. A direct seasonally adjusted fruit series would be made up by adjusting the aggregate of all the unadjusted series (for apples, pears, kiwifruit, etc). We use the x13 ARIMA-SEATS package to run our seasonal adjustment. 21 See seasonal adjustment in Statistics New Zealand for more information. See Analytical consumer price index seasonally adjusted series for how seasonal adjustment relates to the CPI. Rounding index numbers and calculating percentage changes We publish percentage changes to one decimal place and calculate them from index numbers rounded to the nearest index point. For comparisons that cross the index reference period, customers should compare rounded index numbers (for the later period) with unrounded index numbers (for the earlier period). Distribution of item-level index movements table The distribution of item-level index movements table in this release gives additional information on the distribution of price movements for the current quarter's CPI. The analytical statistics in the table indicate how widespread price changes are, and their relative magnitude when compared with previous quarters. The weighted average price increase and decrease uses unrounded index numbers for the previous and current periods to calculate item-level price movements from the previous period – these are weighted using the previous period's expenditure weights. We calculated the previous period expenditure weight for an item by updating base-period expenditure weights, using the price change for the item from the base period to the previous period. We use movements based on unrounded index numbers to determine whether items have increased, showed no change, or decreased in price. Previous period expenditure weights are used to indicate the proportion of the expenditure weight that has increased, showed no change, or decreased. Detailed contribution information tables Tables 8.01 and 8.02 include supplementary analytical information for group, subgroup, and class contributions to the overall change in the all groups CPI. We give the contribution information as index points, percentage points, and percentage contributions from the previous quarter and from the same quarter of the previous year. These tables provide a broader perspective of the categories contributing to movement in the all groups CPI. Where there is only one class within a subgroup, we omit the class to avoid unnecessary duplication. We calculate the information in tables 8.01 and 8.02 from unrounded index numbers. Percentage changes are calculated from index numbers rounded to the nearest index point (see 'Rounding of index numbers and calculation of percentage changes', above). As such, the sum of each of the group, subgroup, or class percentage point contributions may differ from the overall percentage change in the CPI all groups. 22 Weighted average retail prices of selected food items We include a selection of average retail prices for the current and previous quarter in table 5 of this release. The weighted average prices are calculated by applying index movements to weighted average prices for the June 2006 quarter CPI. They are not statistically accurate measures of average transaction price levels, but do provide a reliable indicator of percentage changes in prices. Determining the effect of a specified change in a lower-level index As we reweighted the CPI and FPI at the June 2014 quarter, but continue to publish on an index reference period of June 2006 quarter (=1000), we have modified the method used to determine the effect that a specified change in a lower-level index would have on a higher-level index to which it contributes – for the September 2014 and subsequent quarters. The index points effect and percentage contribution on a higher-level index of a specified percentage change in a lower-level index that contributes to the higher-level index can be determined by: 1. Adjusting the lower-level index for the previous period (In-1,low) by the specified percentage change (PCn,low) to derive the index number for the current period: 2. Calculating the index points effect on the higher-level index of the specified change in the lower-level index: 3. Calculating the percentage change in the higher-level index that would be caused by the specified change in the lower-level index: I : index n : period n, where n is the September 2014 quarter or a subsequent quarter (CPI), or the July 2014 month or a subsequent month (FPI) n-1 : period n-1 Jun14 : June 2014 quarter (CPI) or June 2014 month (FPI) low : lower-level index high : higher-level index W : expenditure weight, expressed as a percentage of the all groups (CPI) or group (FPI) index PC : percentage change PE : index points effect low-on-high : lower-level index on higher-level index 23 Example: The effect of a 5.0 percent increase in the petrol index (weight is 5.03 percent in the CPI) from the June 2014 quarter to the September 2014 quarter on the all groups CPI index is calculated by: 1. Increasing the petrol index for the June 2014 quarter by 5.0 percent to derive the index number for the September 2014 quarter: 2. Calculating the index points effect on the all groups CPI index of the 5.0 percent increase in the petrol index: 3. Calculating the percentage change in the all groups CPI index that would be caused by a 5.0 percent change in the petrol index: Timing of published data We publish the CPI 12 working days after the reference quarter. CPI rolling review of retail outlets We completed the first cycle of our rolling review of retail outlets (where we collect CPI prices from) in January 2014. Price Index News: July 2012 has more information on the review’s scope. At the start of the CPI rolling review, we organised the CPI basket items we track at retail outlets into eight review groups. Consumer electronics items were to be reviewed annually, in group 4 and group 8. However, we decided to reduce the number of review groups to seven by reviewing consumer electronics items once, in the last group. This is because external data about the 24 characteristics of consumer electronics items was not available at the time the first scheduled review of that group was to start. Changes actioned in the first seven review groups were:        Group 1 – clothing, footwear, and furniture (implemented in the Consumers Price Index: September 2012 quarter) Group 2 – services, vehicles, and personal goods (implemented in the Consumers Price Index: December 2012 quarter) Group 3 – sports and stationery goods (implemented in the Consumers Price Index: March 2013 quarter) Group 4 – convenience stores, liquor stores, bars, hospitality clubs, and ready-to-eat food outlets (implemented in the Food Price Index: April 2013 and the Consumers Price Index: June 2013 quarter) Group 5 – supermarkets (food) (implemented in the Food Price Index: August 2013 and the Consumers Price Index: September 2013 quarter) Group 6 – supermarkets (food and non-food) (implemented in the Food Price Index: August 2013 and the Consumers Price Index: September 2013 quarter) Group 7 – home appliances, audio-visual equipment, electronic equipment and games, builders' hardware, and garden supplies (implemented in the Consumers Price Index: December 2013 quarter). During the CPI rolling review, we reviewed the following:    outlets visited in groups 1–4 and group 7 product specifications of items priced at the outlets visited in groups 1–7 mix of brands tracked at supermarkets (groups 5 and 6), to ensure they continue to reflect market shares. We also expanded price collection for the following items:     CDs and books – to include local and overseas online retailers (group 3) magazines – to include local online retailers (group 3) takeaway pizzas – to collect prices from pizza chain outlets online (group 4) pre-recorded Blu-ray discs, pre-recorded DVDs, tablets, MP3 players, and computer software – to include local online retailers (group 7). We will begin the next cycle of our rolling review in 2015. For more information on the review, please contact: Katrina Dewbery or Alan Bentley Wellington 04 931 4600 info@stats.govt.nz 25 More information More information about the consumers price index is available on our website. Statistics in this release have been produced in accordance with the Official Statistics System principles and protocols for producers of Tier 1 statistics for quality. They conform to the Statistics NZ Methodological Standard for Reporting of Data Quality. Liability While all care and diligence has been used in processing, analysing, and extracting data and information in this publication, Statistics NZ gives no warranty it is error-free and will not be liable for any loss or damage suffered by the use directly, or indirectly, of the information in this publication. Timing Our information releases are delivered electronically by third parties. Delivery may be delayed by circumstances outside our control. Statistics NZ does not accept responsibility for any such delay. Crown copyright© This work is licensed under the Creative Commons Attribution 4.0 International licence. You are free to copy, distribute, and adapt the work, as long as you attribute the work to Statistics NZ and abide by the other licence terms. Please note you may not use any departmental or governmental emblem, logo, or coat of arms in any way that infringes any provision of the Flags, Emblems, and Names Protection Act 1981. Use the wording 'Statistics New Zealand' in your attribution, not the Statistics NZ logo. 26 Correction Correction to purchase of housing class for New Zealand less Canterbury We corrected a processing error for the ‘purchase of housing class – New Zealand less Canterbury’ series published in supplementary table 4.01. We corrected the September 2011 quarter price movement, from a decrease of 0.1 percent to an increase of 0.8 percent. This correction affects the quarterly and annual movements from the September 2011 quarter until the September 2015 quarter. For the most recent quarter, we corrected the series from an index of 1366 to 1378. This error has no effect on the headline ‘All groups CPI’ or any other series. 27 Contacts For media enquiries contact: Matt Haigh Wellington 04 931 4600 Email: info@stats.govt.nz For technical information contact: Lourdes Vivo Wellington 04 931 4600 Email: info@stats.govt.nz For general enquiries contact our Information Centre: Phone: 0508 525 525 (toll free in New Zealand) +64 4 931 4600 (outside New Zealand) Email: info@stats.govt.nz Subscription service: Subscribe to information releases, including this one, by completing the online subscription form. Correction notifications: Subscribe to receive an email if a correction notice is published for Consumers Price Index. Unsubscribe to correction notifications for Consumers Price Index. Subscribe to all to receive an email if a correction notice is published for any of our information releases. Unsubscribe to all if you change your mind. 28 Tables See the Excel tables in the 'Downloads' box on this page. If you have problems viewing the files, see opening files and PDFs. We have updated the consumers price index table formatting from the June 2012 quarter. 1. Consumers price index, tradables, non-tradables, and all groups – index numbers and percentage changes 2.01 Consumers price index, groups and subgroups – index numbers 2.02 Consumers price index, groups and subgroups, percentage change from previous quarter 2.03 Consumers price index, groups and subgroups, percentage change from same quarter of previous year 3.01 Consumers price index, selected groupings – index numbers 3.02 Consumers price index, selected groupings, percentage change from previous quarter 3.03 Consumers price index, selected groupings, percentage change from same quarter of previous year 4. International comparisons of consumer price indexes, excluding housing and household utilities group and credit services class – index numbers and percentage change 5. Weighted average retail prices of selected items 6. Consumers price index, expenditure weights, by group 7. Consumers price index, regional expenditure weights 8.01 Contribution to all groups and percentage change from previous quarter, by group, subgroup, or class 8.02 Contribution to all groups and percentage change from same quarter of previous year, by group, subgroup, or class 9. Consumers price index, expenditure weights, by group, subgroup, or class 10. Consumers price index, COICOP divisions – index numbers and percentage changes 11. Consumers price index, trimmed means and all groups – percentage changes 12. Consumers price index, weighted percentiles and all groups – percentage changes 13. Distribution of national item-level index movements from previous quarter 14. Consumers price index, seasonally adjusted tradables, non-tradables, and all groups – index numbers and percentage changes 15.01 Consumers price index, seasonally adjusted groups and subgroups – index numbers 15.02 Consumers price index, seasonally adjusted groups and subgroups, percentage change from previous quarter Supplementary tables These tables provide longer time-series information than the tables above. Given this, they are not suitable for printing. See the 'Downloads' box. 1. Consumers price index, tradables, non-tradables, and all groups – index numbers and percentage changes 2.01 Consumers price index, groups and subgroups – index numbers 2.02 Consumers price index, groups and subgroups, percentage change from previous quarter 2.03 Consumers price index, groups and subgroups, percentage change from same quarter of previous year 3.01 Consumers price index, selected groupings – index numbers 3.02 Consumers price index, selected groupings, percentage change from previous quarter 3.03 Consumers price index, selected groupings, percentage change from same quarter of previous year 29 4.01 Consumers price index, purchase of housing class, selected regions – index numbers and percentage changes 4.02 Consumers price index, actual rentals for housing subgroup, selected regions – index numbers and percentage changes 5.01 Consumers price index, percentage of prices that were discounted in quarter 5.02 Consumers price index, average quarterly percentage price change of items that were discounted in quarter 6. Consumers price index, seasonally adjusted tradables, non-tradables, and all groups – index numbers and percentage changes 7.01 Consumers price index, seasonally adjusted groups and subgroups – index numbers 7.02 Consumers price index, seasonally adjusted groups and subgroups, percentage change from previous quarter 8. Consumers price index, all groups and selected groups – index numbers and percentage changes, by region Access more data on Infoshare Use Infoshare, a free online tool to access time-series data specific to your needs. To access the CPI time series, select the following from the homepage: Subject category: Economic indicators Group: Consumers Price Index The CPI series provide additional information to that in this release, including:        index series for the CPI and its groups, subgroups, classes, and selected sections indexes compiled under the international classification of Classification of Individual Consumption according to Purpose (COICOP) the CPI, and selected groups, for the five broad regions non-standard aggregations of indexes (for example, alcoholic beverages consumed off licensed premises) analytical measures of price change historical seasonally unadjusted index series average prices for a selection of items in the CPI basket. The time series can be downloaded in Excel or comma delimited format. Percentage movements can be calculated using the following formula: ((Index number for later period minus index number for earlier period) divided by index number for earlier period) multiplied by 100. More information about Infoshare can be found on our website. Next release Consumers Price Index: March 2016 quarter will be released on 18 April 2016. 30