New Zealand behind the times on inflation data

• Inflation in New Zealand is running at a 32-year high.
• Stats NZ publishes inflation data quarterly, disadvantaging NZ businesses.
• US, Britain, Japan, Europe and Australia provide monthly inflation updates.

Professional accounting body CPA Australia is urging New Zealand’s official statisticians to provide monthly inflation data to help businesses navigate increasingly uncertain trading conditions, surging prices and rising interest rates.

The Reserve Bank of New Zealand increased interest rates by 50 basis points on Wednesday after inflation reached a three decade high of 7.3 per cent for the year to June. The next raft of inflation data will not be published until October.

New Zealand is one of the only advanced economies in the world to report the Consumer Price Index (CPI) quarterly rather than provide monthly updates, CPA Australia’s New Zealand Country Head Rick Jones said.

“In an uncertain environment, New Zealand’s businesses need access to timely and accurate data. Recently, the Australian Bureau of Statistics made the welcome decision to shift to providing a monthly inflation indicator. We encourage Stats NZ to do the same,” he said.

“Inflation is one of several statistics on which the RBNZ bases the official cash rate, but they’re not the only ones who rely on this data. Around 97 per cent of New Zealand businesses are small businesses employing fewer than 20 people. In a rapidly changing environment, businesses and consumers need access to more regular data to make better financial decisions,” he said.

Since February, the RBNZ has raised the cash rate from one per cent to three per cent. However, because of quarterly reporting, it’s difficult to see the effects of these changes on inflation.

“For Kiwi consumers shopping at the supermarket, for farmers paying for fertiliser and petrol, for exporters facing escalating shipping rates, quarterly inflation data provides a price signal that’s well behind the times,” Jones said.

“Imagine you’re a doctor trying to treat a medical condition. Would you want three-month-old lab results, or blood work-ups from this month? Clearly, we’d all want our doctor to have the most up to date information available. That would make for better informed decisions. It’s the same here.

“The US, UK, Japan, Europe and now Australia all have monthly inflation reporting. This means they have access to current data within weeks, not months, of making decisions.

“Access to a monthly CPI puts these countries in a much better position to form a view and respond effectively,” said Jones.

“In a high-inflation environment, we need New Zealand companies and institutions to be just as agile and flexible.”

Following calls by CPA Australia, the Australian Bureau of Statistics earlier this month announced it would start providing a new monthly CPI indicator from October.

The ABS’ new indicator will include prices of all the items in the current CPI basket, but not all prices will be updated monthly.

The ABS’ move to monthly reporting included using new data sources to reduce data collection costs, particularly scanner data and web-scraping techniques, to provide high frequency data at lower cost. CPA Australia encourages Stats NZ to consider similar methods.

 

Media contact

Rick Jones: 021 1901 039 or  [email protected]