Nicholas Jones

Nicholas Jones is the New Zealand Herald’s education reporter.

From tripe to e-books - 100 years of measuring prices

Consumers price index provides a vivid snapshot of social change

A basket of goods and services that cost £1 in 1914 would cost about $151 now. In this 1942 photo, a grocer cuts a coupon from a customer's ration book. Photo / NZ Herald.
A basket of goods and services that cost £1 in 1914 would cost about $151 now. In this 1942 photo, a grocer cuts a coupon from a customer's ration book. Photo / NZ Herald.

Prices in New Zealand have shot up by 7500 per cent during the past century - but milk, cheese and eggs are relatively cheaper than in 1914.

From dried prunes, tinned herrings and starch, to flat bread, frozen berries and e-books - the focus of the consumers price index (CPI) has changed markedly over its 100 years.

And while some items have leaped in price, milk, butter and cheese have become much cheaper after adjusting for inflation.

The index measures the rate of price change of goods and services bought by New Zealand households.

It started in the June 1914 quarter and, with yesterday's release, has now been going for 100 years.

To mark the 100 years, Statistics NZ has released an interactive visualisation on its website showing when goods and services were added, or removed, from the index.

Statistics NZ prices manager Chris Pike said prices had changed somewhat over the past century.

Annual inflation had averaged 4.4 per cent but peaked at 18.9 per cent in the June 1987 quarter, soon after the introduction of GST.

"A basket of goods and services that cost £1 in 1914 would cost about $151 now if the prices of those goods and services had increased in line with the CPI," Mr Pike said.

The 1914 index provides an insight into what was in most pantries at the time, including golden syrup, mutton and tripe.

After a review in 1948, the index was widened to include goods and services not considered essentials, and today around 700 are monitored.

About 3000 households are surveyed to decide what to include, and retail transaction data is also used.

The removal process can seemingly lag behind trends. Compact discs are still included, for example, despite many now downloading albums over the internet.

Mr Pike told the Herald digital music downloads were included in the CPI, and there was often an overlap as one technology or item stopped being used by a proportion of the population.

Dictionaries, envelopes and recordable CDs were all removed in the last review in 2011, when e-books and external hard-drives were added.

Some items are included for only a few years, reflecting fashions that were quickly discarded.

"In 1988 we added wine-coolers and waterbeds. And both of those two were gone five years later."

While the measured items have changed over time, so have the quantities. A century ago, 25-pound bags of flour and 56-pound bags of sugar were included - both are measured as 1.5kg bags now.

The CPI is used by the Reserve Bank to guide monetary policy, by the Government to adjust welfare benefit rates, and by employers and employees in wage negotiations.

It rose 0.3 per cent in the June 2014 quarter, below most expectations.

However, Council of Trade Unions economist Bill Rosenberg said the rises were occurring in food, housing and electricity, all areas that would be keenly felt by families.


See the June Consumers Price Index here:

- NZ Herald

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