The consumers price index (CPI), New Zealand’s best known measure of inflation, measures the rate of price change of goods and services purchased by households. The CPI consists of a basket of goods and services that represent purchases made by households. The goods and services in the basket, and their relative importance, are reviewed every three years to ensure the basket remains up to date.
There are about 690 goods and services included in the basket. They are classified into 11 groups:
- alcoholic beverages and tobacco
- clothing and footwear
- housing and household utilities
- household contents and services
- recreation and culture
- miscellaneous goods and services.
These groups are then broken down further into 45 subgroups and then into 107 classes. The CPI is reported each quarter down to the class level. Each good or service in the basket is assigned an expenditure weight (see definitions under ‘Statistical calculations’) that represents its relative importance in household spending patterns.
As a result of the 2017 CPI review:
- in-car satellite navigation systems have been removed (they were added to the basket in 2008)
- DVDs and Blu-ray discs have gone (added to the basket in 2006 and 2011, respectively) along with the hire of DVDs, set-top boxes, and external computer drives
- MP3 players are out (they were added to the basket in 2006).
“At the same time, we’re seeing increased spending on technology accessories like headsets and cellphone cases. We’ve added these items to the CPI basket as part of the latest review.”
“The CPI basket is really a reflection of New Zealand society and how it has changed over time,” Mr Attewell said.
“We added the electric lightbulb to the basket in the 1920s, televisions and record players in the 1960s, microwaves and car stereos in the 1980s, and MP3 players and digital cameras in the 2000s. As these items go out of fashion they are removed from the basket.”
Housing and food remain the most important items in the basket, accounting for almost half of people’s spending. Housing includes rent, new builds, and other house improvements.