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Revised Consumers Price Index - Post Error

Revision to September 1999 Quarter Consumers Price Index

Government Statistician Len Cook today stated that the CPI for the September 1999 quarter, released on 29 October 1999, has been revised. The consumer price increase in that quarter is now 0.4 per cent, rather than the 0.6 per cent initially published.

This revision results from a correction released by Statistics New Zealand, following the discovery of a mistake in a procedure used in the five-yearly rebase of the index.

The revised movement in the CPI for the year ended September is a decrease of 0.5 per cent, rather than the originally published decline of 0.3 percent. The corresponding annual movement for the price stability target of the Reserve Bank is now 1.1 per cent, compared with 1.3 per cent. A full set of revised data will be available on Monday 6 December.

"The objective of providing the most accurate possible measures occasionally means revisions to already published figures, as new information and later checking improve our information base," said Mr Cook.

"In this case, I have judged it important to make the revision as soon as possible, because the quarterly change in the CPI is small and the correction consequently significant. We soon move into a period when analysts review inflationary expectations and predictions.

"The need for this revision arose from analysis undertaken in Statistics New Zealand since the CPI release at the end of October. This analysis identified an inconsistency which has led us to fully re-test all parts of the September 1999 CPI rebase calculations, and rework one procedure used during the five-yearly rebase. That procedure was found to have not provided results at the level of accuracy required for the Consumers Price Index. The procedure had been developed in 1994, and this was the first rebase of the all groups CPI since the procedure at fault was developed. The use of this procedure was a mistake, and extensive re-testing has confirmed that I can be fully satisfied with all other aspects of the revision process.

"The Minister of Finance, the Labour Spokesperson and the Governor of the Reserve Bank have today been advised of this error. There have been no such corrections to the CPI over the last 25 years. We know well the importance of this particular statistic and I apologise for the error.

"Because an error such as this is rarely made, there is a high confidence in our work. However, I wish to provide some additional assurance to government, and I will initiate a special review, the scope of which will be discussed with the Auditor-General before we begin this work."

A complete set of revised figures will be released on Monday 6 December.

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