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Consumers Price Index: March 2017 quarter
Embargoed until 10:45am  –  20 April 2017
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.

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 price-level 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 pre-Christmas 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.

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