Consumers Price Index: June 2010 quarter

Consumers price index quarterly movement

The consumers price index (CPI) recorded an increase of 0.3 percent in the June 2010 quarter. This follows an increase of 0.4 percent in the March 2010 quarter and a 0.2 percent decrease in the December 2009 quarter.

Six groups increased, with alcoholic beverages and tobacco (up 3.5 percent), transport (up 0.9 percent), and housing and household utilities (up 0.5 percent), being the most significant contributors.

Four groups recorded decreases with the largest contributions coming from the food (down 0.9 percent), and recreation and culture (down 0.7 percent) groups.

The most significant upward contributions came from higher prices for cigarettes and tobacco (up 8.7 percent), petrol (up 1.4 percent), and second-hand cars (up 2.4 percent). The most significant individual downward contribution came from lower prices for audio-visual and computing equipment (down 4.6 percent).
 

Distribution of item-level movements

The table below outlines the distribution of price movements in the March 2010 and June 2010 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 June 2010 quarter, the weighted average price decrease is larger than in the March 2010 quarter, while the weighted average price increase is unchanged. The number of items that rose in price has increased, while the number of items that fell in price has decreased.

These factors resulted in a 0.3 percent increase in the CPI for the June 2010 quarter, following an increase of 0.4 percent in the March 2010 quarter.

The following graph shows the index points contribution of all items that rose in price, all items that fell in price, and the total index points movement.

 

The index points contribution from items that rose in price is similar to the March 2010 quarter, while the slightly larger contribution from items that fell in price has resulted in a slightly lower increase in the June 2010 quarter than in the March 2010 quarter.

CPI annual movement

The CPI increased 1.8 percent in the year to the June 2010 quarter, following increases of 2.0 percent for the years to the March 2010 and December 2009 quarters.

Seven of the 11 groups in the CPI made upward contributions in the year to the June 2010 quarter. The most significant contribution came from transport (up 6.6 percent). Other upward contributions came from housing and household utilities (up 1.7 percent), alcoholic beverages and tobacco (up 5.3 percent), health (up 3.7 percent), education (up 4.8 percent), clothing and footwear (up 1.2 percent), and miscellaneous goods and services (up 0.6 percent).

The food (down 0.7 percent), household contents and services (down 2.0 percent), recreation and culture (down 0.8 percent), and communication (down 2.0 percent) groups made downward contributions.

The most significant upward contributions came from higher prices for petrol (up 9.5 percent), international air transport (up 16.1 percent), and cigarettes and tobacco (up 9.3 percent).

The most significant downward contribution came from lower prices for audio-visual and computing equipment (down 17.5 percent).

CPI analytical series

In the June 2010 quarter, the non-tradable component increased 0.6 percent, mainly due to higher prices for cigarettes and tobacco, reflecting an increase in excise duty. The tradable component decreased 0.1 percent. Lower prices for tradable food items and audio-visual and computing equipment were offset by higher prices for petrol and second-hand cars.

For the year to the June 2010 quarter, the non-tradable component increased 2.2 percent. This is now the third quarter in which the annual increase for non-tradables has been no more than 2.3 percent, whereas annual increases were at least 3.0 percent for the previous eight years. The tradable component rose 1.1 percent for the year to the June 2010 quarter due mainly to higher petrol prices.

 

In the June 2010 quarter, the trimmed mean measures, which exclude extreme price increases and decreases, recorded quarterly increases ranging from 0.3 to 0.4 percent. This indicates that underlying price change for the quarter was in line with the CPI overall. The annual trimmed mean measures recorded annual increases of between 1.9 percent and 2.0 percent, which are slightly above the annual increase in the all groups CPI.

 

Alcoholic beverages and tobacco

The alcoholic beverages and tobacco group rose 3.5 percent in the June 2010 quarter, following an increase of 1.3 percent in the March 2010 quarter, and a decrease of 1.0 percent in the December 2009 quarter.

The most significant individual upward contribution came from higher prices for cigarettes and tobacco (up 8.7 percent). Cigarette and tobacco prices were affected by an increase in excise duty at the end of April. The rate of excise on cigarettes rose by 10.0 percent, while excise on tobacco rose 25.4 percent. In May, retail prices for cigarettes rose between 8 and 10 percent, while tobacco prices rose about 20 percent. As the increase in excise duty occurred at the end of April, two-thirds of the impact was shown in the June 2010 quarter CPI. The remainder will be shown in the September 2010 quarter.

The June 2010 quarter rise in cigarette and tobacco prices is the largest since a 10.4 percent rise in the September 2000 quarter, which was also affected by excise duty.

If cigarette and tobacco prices had remained unchanged from the March 2010 quarter, the CPI would have increased by 0.1 percent.

Alcoholic beverage prices also rose in the June 2010 quarter (up 1.2 percent), with alcoholic beverages for consumption off licensed premises rising 1.5 percent.

Two new series – 'all groups less alcoholic beverages subgroup' and 'all groups less cigarettes and tobacco subgroup' have been added to tables 3.01, 3.02, and 3.03 of the release. The all groups less cigarettes and tobacco subgroup rose 0.1 percent in the June 2010 quarter.

The alcoholic beverages and tobacco group increased 5.3 percent from the June 2009 quarter to the June 2010 quarter. The most significant increase came from cigarettes and tobacco (up 9.3 percent).

 

Food

Food prices fell 0.9 percent in the June 2010 quarter, following a rise of 1.0 percent and a fall of 2.4 percent in the March 2010 quarter and the December 2009 quarter, respectively. If food had remained unchanged from the March 2010 quarter, the CPI would have increased 0.5 percent.

Four of the five food subgroups made downward contributions in the June 2010 quarter, in particular meat, poultry, and fish (down 3.3 percent), and fruit and vegetables (down 2.6 percent). Grocery food (down 0.2 percent) and non-alcoholic beverage (down 0.2 percent) prices were also down. The fall in meat, poultry, and fish prices is the largest since a 3.4 percent decrease for the June 1986 quarter.

Restaurant meals and ready-to-eat food (up 0.5 percent) was the only subgroup to record an increase.

The most significant individual downward contributions came from lower prices for kiwifruit (down 57.7 percent), apples (down 23.4 percent), fresh chicken (down 6.5 percent), and porterhouse/sirloin beef steak (down 7.2 percent). Kiwifruit and apple prices tend to be lower in June quarters, as supply becomes more plentiful.

The food group fell 0.7 percent from the June 2009 quarter to the June 2010 quarter. This is the first annual fall in over seven years and the largest since a fall of 0.8 percent in the year to the December 1999 quarter.

In the year to the June 2010 quarter, two subgroups recorded decreases: fruit and vegetables (down 6.3 percent) and meat, poultry, and fish (down 3.6 percent). The other three subgroups, restaurant meals and ready-to-eat food (up 2.1 percent), non-alcoholic beverages (up 2.0 percent), and grocery food (up 0.4 percent), made upward contributions.

 

Transport

Prices for the transport group increased 0.9 percent in the June 2010 quarter, following increases of 1.1 percent and 1.5 percent in the March 2010 and December 2009 quarters, respectively.

The most significant individual upward contributions came from higher prices for petrol (up 1.4 percent) and second-hand cars (up 2.4 percent).

Domestic air transport prices fell 1.8 percent in the June 2010 quarter. Prices for domestic air transport have been falling since the March 2009 quarter and have now fallen by a total of 10.9 percent over the past 18 months.

The transport group increased 6.6 percent from the June 2009 quarter to the June 2010 quarter. The most significant individual upward contribution came from higher prices for petrol (up 9.5 percent). If petrol prices had remained constant from the June 2009 quarter to the June 2010 quarter, the CPI would have increased 1.3 percent.

International air transport (up 16.1 percent) and second-hand cars (up 7.7 percent) also increased for the year to the June 2010 quarter. This is the largest annual increase in international air transport since a 17.7 percent increase in the June 1983 quarter, and follows the index reaching a 30-year low in the June 2009 quarter.

Housing and household utilities

The housing and household utilities group increased 0.5 percent in the June 2010 quarter, following increases of 0.3 percent and 0.2 percent in the March 2010 and December 2009 quarters, respectively.

Significant contributions came from higher prices for rentals for housing (up 0.5 percent) and electricity (up 1.0 percent). The increase for electricity includes a small downward correction (with no impact on the overall CPI), made to include a prompt payment discount that had been omitted since the June 2008 quarter. Prices for the purchase of new housing increased 0.4 percent in the June 2010 quarter.

The increases for rentals for housing and purchase of new housing are in line with or greater than the quarterly increases recorded since the December 2008 quarter.

The housing and household utilities group increased 1.7 percent from the June 2009 quarter to the June 2010 quarter.

The most significant upward contributions for the year to the June 2010 quarter came from higher prices for local authority rates and payments (up 5.9 percent) and rentals for housing (up 1.4 percent). The purchase of new housing rose 1.2 percent.

 

Other groups

In the June 2010 quarter, upward movements were recorded for the following groups: health (up 0.7 percent), clothing and footwear (up 0.7 percent), and miscellaneous goods and services (up 0.3 percent). Combined, these groups contributed 0.89 of an index point to the overall CPI movement.

The most significant individual upward contribution came from higher prices for medical services (up 1.4 percent), reflecting higher medical specialist fees.

The education group remained unchanged overall during the June 2010 quarter. Early childhood education prices were up 0.6 percent.

In the June 2010 quarter, downward movements were recorded for recreation and culture (down 0.7 percent), household contents and services (down 0.4 percent), and communication (down 0.4 percent). These groups contributed -1.13 index points to the overall CPI movement.

The 0.7 percent fall in recreation and culture reflected lower prices for audio-visual and computing equipment (down 4.6 percent) and accommodation (down 5.3 percent).

 

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

Next release ...

Consumers Price Index: September 2010 quarter will be released on 18 October 2010.