|Q/Q percent change||-0.1%||-0.2%||0.3%|
|Y/Y percent change||0.8%||0.8%||1.0%|
December quarter consumer price index was down 0.2 percent on the quarter after increasing 0.3 percent in the previous three quarters. According to Statistics New Zealand, the CPI often falls in December quarters.
Petrol prices (down 5.7 percent) made the largest downward contribution. Excluding petrol, the CPI was up 0.1 percent. The average price of a litre of 91 octane petrol in the December 2014 quarter was $2.00 compared with $2.12 in the previous quarter. By the end of the December quarter, petrol pump prices were 7 percent below the average price for the quarter and as at 16 January were 17 percent below the average for the quarter.
Seasonally lower prices for tomatoes, lettuce, and cucumber influenced the decline in vegetable prices (down 14 percent). This is a smaller than usual December quarter decline, following a mild winter. Vegetable prices are now slightly higher than a year ago. Prices for newly built houses excluding land were up 1.7 percent overall, with Auckland up 2.8 percent and Canterbury up 1.7 percent. Housing rentals were up 0.3 percent overall, with Canterbury up 0.9 percent.
International travel prices were higher, with international air fares up 7.3 percent and package holidays up 5.3 percent. These prices usually rise in the December quarter. Domestic air fares also rose, influenced by high demand leading up to the holiday period.
On the year, the CPI increased 0.8 percent -- the smallest annual rise since the June 2013 quarter. Housing and household utilities was the main contributor, with newly built houses (up 5.4 percent), housing rentals (up 2.1 percent), and electricity (up 3.6 percent) all increasing in price. Cigarette and tobacco prices increased 11.9 percent, influenced by an increase in excise duty in January 2014. Petrol (down 4.0 percent) was the main downward contributor. Prices for audio-visual and computing equipment fell 14 percent, after adjusting for quality improvements.
The consumer 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, an adjustment is made to ensure that the price change shown in the CPI is not affected by the change in size or quality.
The CPI represents $88.9 billion spent on goods and services by New Zealand households, at June 2011 quarter prices. This is based on information from the 2009/10 Household Economic Survey and other sources. The CPI has an index reference period of the June 2006 quarter equal to 1000.
A price index measures the change in price between time periods for a given set of goods and services. It summarizes a set of prices for a variety of goods and services collected from a number of outlets. The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets- and your investments. Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion. By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
The CPI is used to help set monetary policy and for monitoring economic performance. It is used by the government 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.