Consumers Price Index: September 2008 quarter

Consumers Price Index quarterly movement

The Consumers Price Index (CPI) recorded an increase of 1.5 percent in the September 2008 quarter, following increases of 1.6 percent and 0.7 percent in the June and March 2008 quarters, respectively.

Nine of the 11 CPI groups recorded increases in the September 2008 quarter. The most significant upward contributions came from the food (up 3.7 percent), housing and household utilities (up 1.4 percent) and transport (up 2.0 percent) groups. Other upward contributions came from the following groups: alcoholic beverages and tobacco (up 1.3 percent), recreation and culture (up 0.8 percent), health (up 1.4 percent), household contents and services (up 0.8 percent), miscellaneous goods and services (up 0.5 percent), and education (up 0.1 percent).

Two groups recorded decreases: communication (down 1.1 percent), and clothing and footwear (down 0.4 percent).

The most significant individual upward contributions came from higher prices for petrol (up 4.6 percent), lettuce (up 94.9 percent), overseas package holidays (up 13.2 percent), and local authority rates and payments (up 4.7 percent).

The most significant individual downward contributions came from lower prices for second-hand motor cars (down 8.0 percent).

 Note: Index points contributions may not sum to totals due to rounding.

Distribution of item-level movements

The table below outlines the distribution of price movements in the June and September 2008 quarters. The CPI has been partitioned into those national item-level indexes that increased, showed no change, or decreased.

 The distribution of item-level movements shows that in the September 2008 quarter:

• the weighted average price increase has fallen while the weighted average price decrease has risen
• the percentage of expenditure weight of items that increased in price is still significantly greater than the percentage of expenditure weight of items that decreased in price
• the weighted average price increase is greater than the weighted average price decrease.

This resulted in an increase of 1.5 percent in the CPI in the September 2008 quarter, following an increase of 1.6 percent in the June 2008 quarter.

CPI annual movement

The CPI increased 5.1 percent in the year from the September 2007 quarter to the September 2008 quarter, following increases of 4.0 and 3.4 percent for the years to the June and March 2008 quarters, respectively.

The latest annual increase is the highest since a high of 7.6 percent for the year to the June 1990 quarter, which incorporated the increase of GST from 10.0 to 12.5 percent in July 1989.

Nine of the 11 groups in the CPI made upward contributions to the annual increase in the year to the September 2008 quarter. The most significant upward contributions came from the transport (up 11.3 percent), food (up 9.5 percent), and housing and household utilities (up 4.7 percent) groups. Also increasing for the year to the September 2008 quarter were the alcoholic beverages and tobacco (up 2.6 percent), health (up 3.2 percent), miscellaneous goods and services (up 2.2 percent), education (up 3.7 percent), household contents and services (up 0.4 percent), and recreation and culture (up 0.1 percent) groups.

Downward contributions came from the following groups: communication (down 1.2 percent) and clothing and footwear (down 0.3 percent).

The most significant individual upward contributions came from higher prices for petrol (up 29.3 percent), which accounted for just over a quarter of the annual movement. Other significant contributions came from the purchase of new housing (up 4.6 percent), electricity (up 6.9 percent), and actual rentals for housing (up 3.1 percent).

The most significant individual downward contributions came from lower prices for audio-visual equipment (down 24.2 percent), and second-hand motor cars (down 5.6 percent).

CPI all groups and tradable and non-tradable component series

In the September 2008 quarter, the tradable component increased 1.9 percent, following an increase of 2.3 percent in the June 2008 quarter. The most significant contribution to the tradable component came from petrol. The tradable component would have risen 1.3 percent if petrol prices had remained constant over the same period.

The non-tradable component increased 1.3 percent, following an increase of 0.9 percent in the June 2008 quarter.

For the year to the September 2008 quarter, the tradable component rose 6.3 percent and the non-tradable component increased 4.1 percent. The most significant upward contribution to the tradable component came from petrol. If petrol prices had remained constant over the same period, the tradable component would have increased 3.2 percent. The most significant downward contribution came from second-hand motor cars.

Within the non-tradable component, the most significant upward contributions to the annual movement came from purchase of new housing, electricity, and actual rentals for housing.

Food

Prices for the food group rose 3.7 percent in the September 2008 quarter, following increases of 2.2 percent and 1.8 percent in the June and March 2008 quarters, respectively. If food prices had remained constant from the June 2008 quarter, the CPI would have increased by 0.8 percent.

The most significant upward contribution came from higher prices for the fruit and vegetables subgroup (up 14.2 percent). The higher price of vegetables (up 20.0 percent) was largely driven by lettuce (up 94.9 percent). Over half of the fresh vegetable items monitored for the CPI recorded double-digit increases in the September 2008 quarter, influenced by unusually wet weather conditions.

Other significant contributions were from grocery food (up 2.2 percent) and meat, poultry and fish (up 2.6 percent).

The food group increased 9.5 percent from the September 2007 quarter to the September 2008 quarter. If food prices had remained constant from the September 2007 quarter, the CPI would have risen by 3.4 percent. All five of the food subgroups increased in price, with the most significant contributions coming from higher prices for the grocery food subgroup (up 12.0 percent) and fruit and vegetables (up 13.9 percent).

The most significant individual upward contribution to the annual movement came from lettuce (up 113.1 percent). This year's winter prices for lettuce were the highest over the past 10 years, while last year's winter peak was the second lowest.

For more information on lettuce price movements please see the September 2008 Price Index News article Lighter lettuce leaves hole in hip pocket.

Housing and household utilities

The housing and household utilities group increased 1.4 percent in the September 2008 quarter, following increases of 1.2 percent and 1.0 percent in the June and March 2008 quarters, respectively.

Local authority rates and payments increased 4.7 percent in the September 2008 quarter. Local authorities usually determine their rates annually, and these normally come into effect from 1 July. The movement in local authority rates and payments in the September 2008 quarter reflects approximately 81 percent of the weight in the sample, with the remainder expected to be included in the December 2008 quarter CPI. Price movements relating to 82 percent and 92 percent of the weight of the sample were included in the September 2007 and September 2006 quarters, respectively.

Prices for the purchase of new housing increased 1.3 percent in the September 2008 quarter, following increases of 1.1 percent and 0.9 percent in the June 2008 and March 2008 quarters, respectively. Changes in quality for dwellings in selected areas around the North Island resulting from amendments to the Building Act (2004), whereby buildings are required to be more energy efficient, have been adjusted for this quarter. Of the respondents reporting in the September 2008 quarter, 52 percent reported an increase in price, 44 percent reported no change, and 5 percent reported a decrease in price.

Actual rentals for housing rose 0.8 percent in the September 2008 quarter, following rises of 0.7 percent and 1.2 percent in the June 2008 and March 2008 quarters, respectively. Actual rentals for housing has increased every quarter since June 2001.

The housing and household utilities group increased 4.7 percent from the September 2007 quarter to the September 2008 quarter. The most significant upward contributions came from higher prices for the purchase of new housing (up 4.6 percent), electricity (up 6.9 percent), actual rentals for housing (up 3.1 percent), and local authority rates and payments (up 5.4 percent).

 

Transport

Prices for the transport group rose 2.0 percent in the September 2008 quarter, following increases of 4.9 percent and 0.8 percent in the June and March 2008 quarters, respectively.

The most significant individual upward contribution came from higher prices for petrol (up 4.6 percent). Petrol prices reached a high point in the July month followed by decreases in the August and September months. If petrol prices had remained constant from the June 2008 quarter to the September 2008 quarter, the CPI would have increased 1.3 percent. Vehicle relicensing fees (up 16.1 percent), international air transport (up 3.7 percent), domestic air transport (up 5.4 percent), and diesel (up 5.1 percent) also made significant upward contributions to the transport group. The most significant downward contribution came from lower prices for second-hand motor cars (down 8.0 percent). The transport group increased 11.3 percent from the September 2007 quarter to the September 2008 quarter.

The most significant individual upward contribution came from higher prices for petrol (up 29.3 percent). If petrol prices had remained constant from the September 2007 quarter to the September 2008 quarter, the CPI would have increased 3.7 percent.

 

Other groups

In the September 2008 quarter, upward movements were also recorded for the following groups: alcoholic beverages and tobacco (up 1.3 percent), recreation and culture (up 0.8 percent), health (up 1.4 percent), household contents and services (up 0.8 percent), miscellaneous goods and services (up 0.5 percent), and education (up 0.1 percent). Combined, these groups contributed 3.27 index points to the overall CPI movement.

The most significant contributions to the other groups that recorded an upward movement came from higher prices for overseas package holidays (up 13.2 percent), beer (up 2.7 percent), and hospital services (up 5.6 percent). The rise in beer prices reflected the annual increase in excise duty on alcohol from 1 July.

In the September 2008 quarter, downward movements were recorded for the communication (down 1.1 percent) and the clothing and footwear (down 0.4 percent) groups. Combined, these two groups contributed -0.56 index points to the overall CPI movement.

For technical information contact:
Peter McGinty or Daniel Griffiths
Wellington 04 931 4600
Email: info@stats.govt.nz 

CPI review completed 

A review of the CPI has been implemented with the release of the September 2008 quarter index. The review encompassed reselecting and reweighting the basket of representative goods and services, to ensure the basket continues to reflect household spending patterns.

The main source of information used in the review was the 2006/07 Household Economic Survey (HES), which collected detailed information on the spending patterns of about 2,600 households. The survey ran from July 2006 to June 2007. The number of private households covered by the HES grew by 5.0 percent from 1,494,200 for 2003/04 to 1,569,200 for 2006/07.

However, because the HES does not provide accurate information for some goods and services, information from a range of other sources was also used.

The initial weights for the year to June 2007 (the weight reference period) were 'price updated' to the June 2008 quarter (the price reference period). This updating involved expressing the underlying quantities of the weight reference period in the prices of the price reference period. The initial weights indicated that households spent $76.831 billion on goods and services covered by the CPI during the year to June 2007 (2006/07). When the goods and services acquired during 2006/07 are expressed in prices that were current at the June 2008 quarter, that spending rose to $80.982 billion (5.4 percent higher, mainly due to increased housing, transport and food prices since 2006/07).

The following graph compares the new June 2008 quarter expenditure weights for the 11 CPI groups with the June 2006 quarter weights. Housing and household utilities; and food have grown in relative importance. The graph shows that $22.75 of every $100 spent by households on goods and services covered by the CPI is spent on housing and household utilities, compared with $20.02 in 2006. This reflects increased spending on renting and on purchasing new housing, and higher electricity prices. Food accounts for $17.83 of every $100 spent, compared with $17.38 in 2006. The increase largely reflects an increase of 11.3 percent in food prices from the June 2006 quarter to the June 2008 quarter.

Other groups have shown declines in relative importance, including transport (down from $17.24 to $16.18 of every $100 spent), with lower spending on cars contributing to the fall. However, the relative importance of petrol has increased from $5.38 to $5.47 of every $100 spent. The new expenditure weights appear in table 6 (group) and table 9 (group, subgroup and class) of this release.

As part of the review, the regional population weights have been updated, to reflect the regional distribution of the usually resident population as at June 2007. The new population weights appear in table 7.

Goods added to the basket as part of the review include heat pumps and cut flowers. High-tech products that have been added include in-car satellite navigation units, free-to-air digital television receivers, and digital music downloads. Services added to the new basket include lawn mowing, house cleaning and auction services, with the latter reflecting the growing popularity of online trading of goods.

Goods that have been removed from the basket include solid fuel burners, cathode ray tube television sets, video cassette tapes, photographic film and writing paper.

For more information as well as a full list of goods and services that have been added to or removed from the CPI basket, read the paper, Consumers Price Index, 2008 Review.

For further information:
Chris Pike or Daniel Griffiths
Wellington 04 931 4600
Email: info@stats.govt.nz 

Next release ...

Consumers Price Index: December 2008 quarter will be released on 20 January 2009.