CPI Review Completed

Embargoed until 10:45am – 28 September 2006

CPI Review Completed

The Consumers Price Index (CPI) has undergone a major review, which will culminate in the publication of the reweighted CPI for the September 2006 quarter on 25 October 2006. Statistics New Zealand today released information on the conclusions from the review.

Periodic reviews of the CPI are undertaken to ensure that it remains relevant and up to date. The current review has been shaped by recommendations made by the 2004 CPI Revision Advisory Committee. The committee convened in June 2004 to undertake an independent review of the practices and methods used to compile the CPI.

The basket of representative goods and services has been reselected to ensure that it continues to reflect what households buy. Some items were removed, and items added to the basket for the first time include bottled water, flat-panel television sets, laptop computers, MP3 players and beauty therapy services.

A major part of the review involved reviewing the relative importance of goods and services in the CPI basket to reflect changes since the previous review in the spending habits of households. Of the 11 groups, the relative importance of transport has risen from 15.5 percent to 17.2 percent (driven by a strong increase in the weight for petrol), while the weight for housing and household utilities has fallen from 21.5 percent to 20.0 percent. The weight for food has remained at a similar level (17.4 percent).

Housing and household utilities continues to be the highest-weighted group. Within this group, the weight for rentals for housing has risen (from 5.5 percent to 6.9 percent), while the weight for purchase of housing has fallen significantly (from 8.5 percent to 4.7 percent). This is partly due to a fall in the home ownership rate and to an improved method of estimating the weight for purchase of housing.

The review also involved reselecting the sample of retail outlets that prices are collected from. While the sample of 15 regional centres is remaining unchanged, price collection effort is being redistributed to better reflect the population shares of regions, resulting in more prices being collected in the larger cities.

A paper containing more information about the review, Consumers Price Index Review: September 2006, is available on the Statistics New Zealand website (www.stats.govt.nz).

Geoff Bascand
Acting Government Statistician

ENDS

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