Inflation and the basket of goods - New Zealand

New Zealand has added craft beer to the basket of goods it monitors to measure inflation, reflecting changing tastes and consumer spending in the South Pacific nation.

“New Zealand used to be called a country of rugby, racing and beer but spending patterns are changing,” Jason Attewell, senior manager at Statistics New Zealand in Wellington, said Friday. “Kiwis are increasingly keen on craft beer, body massages at beauty spas and football club memberships.”

Craft beer has surged in popularity in New Zealand, while high-speed internet has encouraged new web-based services like Netflix at the expense of older technologies. The statistics agency said DVD players and sewing machines were among items removed from the Consumers Price Index after its three-yearly review, and Uber rides and Airbnb accommodation were among services added.

Attewell said the agency was "introducing the sharing economy to the CPI to keep it relevant for New Zealand."

"We added the electric light bulb 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,” he said. “As these items go out of fashion they are removed from the basket."

As well as components of the basket, Statistics New Zealand reviews the relative contribution of the main categories within the CPI. Food now makes up 19.3 percent of the gauge, up from 18.8 percent, due to increased spending at restaurants and rising prices, the agency said.

Inflation was 1.9 percent in the year through September, near the midpoint of the 1-3 percent range the central bank targets. The fourth-quarter report is due Jan. 25.

Unit 2 & 4: CPI Basket of Goods is updated.

The basket of goods and services that makes up the products used when calculating changes in the cost of living is periodically updated to reflect shifting patterns of spending by UK households. In the latest CPI basket several items have been taken out and others have been included for the first time. Useful for students to understand thew differing impact some goods/services have on inflation.

Unit 2 & 4: The Latest CPI Basket of Goods

Does that reflect your changing habits over the last year? The ONS have released news of changes to be made to the official representative basket of goods whose prices they check to measure inflation. 

Each year they update the 700-or so items in the basket so the contents accurately reflect current trends in spending. So the items added and removed provide an interesting view of the goods and services which are most important to us, and how we are choosing to spend our disposable income.

For 2013, they have included blueberries and pre-packed stir-fry vegetables to improve fruit and fresh vegetable coverage - with perhaps a slight shift towards healthier lifestyles? 

For our leisure habits, Freeview boxes are out but digital TV recorders in, following the digital switchover, and we may be spending more time reading, as e-books are now to be included. 

Apparently young people are buying more white rum from off-licences so that is included, at the expense of champagne as its sales in restaurants and bars dropped by 7% last year - although some off-licence champagne sales are still included. 

And it seems that we are buying more charcuterie, but fewer taps.... 

Quesions for discussions:

A) Do these chages affect you?

B) What is the issue with having an average measure of inflation?

Unit 2: Changes to the basket of goods

The basket of goods needs to be updated regulary to reflect changes in consumers spending habits. Recently tablet computers such as IPads have been added as show in this video HERE

The BBC also reports that lip gloss has replaced lipstick and disposable cameras have been dropped as more and more people switch to digital cameras!!

Have a look at this article HERE for the full list of changes!