Food Price Index: March 2014Embargoed until 10:45am – 11 April 2014Key factsMonthly changeIn March 2014 compared with February 2014:Food prices fell 0.3 percent.Fruit and vegetable prices rose 0.5 percent.Meat, poultry, and fish prices rose 0.9 percent.Grocery food prices fell 1.6 percent.Non-alcoholic beverage prices rose 0.2 percent.Restaurant meals and ready-to-eat food prices rose 0.4 percent.Annual changeFrom March 2013 to March 2014:Food prices increased 1.2 percent.Fruit and vegetable prices increased 1.5 percent.Meat, poultry, and fish prices increased 1.6 percent.Grocery food prices increased 0.2 percent.Non-alcoholic beverage prices increased 2.7 percent.Restaurant meals and ready-to-eat food prices increased 1.9 percent.Liz MacPhersonGovernment Statistician11 April 2014ISSN 1178-0282CommentaryMonthly food prices fall 0.3 percent, influenced by cheaper grocery foodAnnual food prices increase across all five subgroupsLonger-term retail picture for dairy, meat, and grain pricesNew CPI visualisation toolMonthly food prices fall 0.3 percent, influenced by cheaper groceryfoodFood prices fell 0.3 percent in March 2014, following a 1.0 percent fall in February 2014.Prices for grocery food fell 1.6 percent and are now at their lowest level since August 2013.Lower prices were recorded for confectionery, nuts, and snacks (down 3.5 percent), despitehigher prices for boxed chocolates following Valentine's Day in February. Prices also fell forbread and cereals (down 1.8 percent) and milk, cheese, and eggs (down 0.6 percent).Meat, poultry, and fish (up 0.9 percent) made the strongest upward contribution. Beef pricesrose 2.9 percent, following a 4.6 percent fall in February.Fruit and vegetable prices rose 0.5 percent in March 2014. Higher prices for avocados,tomatoes, and strawberries were countered by seasonally lower prices for apples and kumara.Kumara prices are now a third below their peak in January 2013 and about a third below theirrecent high in January 2014. Poor weather conditions in both the planting and harvestingseasons influenced higher January prices for the past two years.2The following graph shows the index points contribution to the food price index (FPI) of items thatrose or fell in price for the month.Annual food prices increase across all five subgroupsIn the year to March 2014, food prices increased 1.2 percent following an increase of 0.2 percentin the year to February 2014. This is the first time all five subgroups have shown an annualincrease since September 2011.The strongest upward group contribution came from restaurant meals and ready-to-eat food (up1.9 percent).In the year to March 2014, prices for non-alcoholic beverages increased 2.7 percent, influencedby higher prices for soft drinks and packaged coffee. Packaged coffee prices are now at theirhighest level for two years, and just below the peak in May 2011.Fruit and vegetable prices increased 1.5 percent. Higher prices for tomatoes, oranges, andmandarins were partly offset by lower prices for lettuce and kumara.Grocery food prices (up 0.2 percent) increased slightly for the year. They were influenced byincreases for milk, cheese, and eggs (up 6.7 percent); and oils and fats (up 6.1 percent). Theseincreases were largely offset by decreases for bread and cereals (down 3.8 percent); andconfectionery, nuts, and snacks (down 3.8 percent).3Longer-term retail picture for dairy, meat, and grain pricesMilk, cheese, and egg prices increased 6.7 percent in the year to March 2014, and are now 3.1percent below their peak in July 2011. Fresh milk prices are now 1.0 percent below theirFebruary 2011 peak.Meat and poultry prices are now 1.6 percent below their peak in October 2013. Pork prices arenow 5.1 percent below their March 2013 peak, lamb prices are 17 percent below their August2011 peak, and beef prices are 2.3 percent below their February 2012 peak.Bread and cereal prices are now 5.0 percent below their peak in February 2012.For more detailed data from the FPI, see the Excel tables in the 'Downloads' box.4New CPI visualisation toolWe have a new interactive Consumers price index visualisation tool to help you to explore thechanges in price and relative importance of goods and services in the consumers price index(CPI) basket.The tool's interactive pie chart allows you to drill down from the all groups CPI to more than 100basket subcategories including restaurant meals, electricity, petrol, and international air fares.The longer the slice the larger the percentage increase and the wider the slice the moreimportant the subcategory is in the overall index.When you open the CPI visualisation, you will see a brief description of how to use it. For furtherdetails, click on the visualisation's 'help' link or see Help using CPI visualisation.You can also download the CPI data in CSV format from the link at the top right of thevisualisation webpage.The CPI visualisation will be available with the latest figures, for the March 2014 quarter, whenthe CPI is released on 16 April.5DefinitionsAbout the food price indexThe food price index (FPI) measures the rate of price change of a fixed basket of food goods andservices purchased by households. The FPI aims to measure price changes of the same items(brand and relevant details) at each outlet over time. When there is a change in the size orquality of any of the goods or services in the basket, we make an adjustment to ensure the pricechange shown in the FPI is not affected by the change in size or quality.The FPI represents $16.9 billion spent on food by New Zealand households each year (at June2011 prices). This is based on information from the 2009/10 Household Economic Survey andother sources, and is equivalent to each household spending about $199 a week on food.See Food price index review: 2011 (tables 3 and 4) for a list of the representative food itemsmonitored in the FPI.Food prices are also included in the consumers price index (CPI). The food group is theonly group of the CPI for which an index is prepared each month. The all groups CPI is preparedquarterly.Food prices in the consumers price index and food price index explains the sources andmethods used to compile food prices.More definitionsA price index measures the change in price between time periods for a given set of goods andservices. It summarises a set of prices, collected from many outlets, for this set of goods andservices.Grocery food specials: For items that are 'on special' or come 'off special', we use the price atthe time of collection. We often give an analysis of these items for the subgroups meat, poultry,and fish; grocery food; and non-alcoholic beverages in the 'Commentary' and ‘Data quality’sections of this release. To be included in this analysis, the item will have been on special lastmonth, this month, or in both months.Upward/downward contributions: Items mentioned in this release are usually those that madea large contribution to the overall movement in the FPI. An item's contribution is a combination ofits weight in the index (ie its relative importance, based on its share of household spending onfood) and the magnitude of price movement. For example, for two items recording the samepercentage rise in price, the item with the larger weight in the FPI will have a larger contributionto the overall movement. This contribution is also referred to as points (or index points)contribution.6Related linksUpcoming releasesFood Price Index: April 2014 will be released on 13 May 2014.Subscribe to information releases, including this one, by completing the online subscription form.The release calendar lists all our upcoming information releases by date of release.Past releasesFood Price Index has links to past releases.Related informationConsumers price index (CPI) measures price change of goods and services purchased by NewZealand households.Food prices in the consumers price index and food price index gives an explanation of thesources and methods used to compile food prices.Electronic card transactions measure the number and value of electronic card transactions withNew Zealand-based merchants.Retail Trade Survey measures sales of a range of household and personal goods and services.7Data qualityPeriod-specific informationThis section contains information about data that has changed since the last release.Reference periodSample sizeImputationGeneral informationThis section contains information that does not change between releases.Reference populationExpenditure weightsCollection methodsSample designAccuracy of the dataConsistency with other periods or datasetsInterpreting the dataMore informationPeriod-specific informationReference periodPrices for the food price index (FPI) were collected during the period 10–17 March 2014, with theexception of fresh fruit and vegetable prices. Fresh fruit and vegetable prices were collectedeach Friday in most urban areas, and each Thursday in remaining urban areas.Sample sizeAbout 22,000 prices were collected from 650 retail outlets.ImputationDue to being unavailable at the time of price collection, on average 0.7 percent of prices (notincluding seasonal fresh fruit and vegetables) are imputed each month – by carrying forward theprevious month’s price.General informationReference populationThe reference population of the FPI covers approximately 98 percent of the usually-resident NewZealand population living in permanent dwellings. There are no exclusions based on incomesource or geographic location.8Expenditure weightsExpenditure weights give the relative importance of the food goods and services in the FPIbasket.The FPI represents about $16.9 billion spent on food goods and services by New Zealandhouseholds each year (at June 2011 month prices). This is based on information from the2009/10 Household Economic Survey and other sources.New Zealand households spent $15.7 billion on food goods and services in the year to June2010 (which is the latest period available). Once the effect of price change between the year toJune 2010 and the year to June 2011 is taken into account (called ‘price updating’), spending onfood rises to $16.9 billion.The relative importance of the FPI subgroups shows that about $38 of every $100 householdsspend on food is spent on grocery food. About $21 is spent on eating out or takeaways, andabout $16 is spent on meat, poultry, and fish. Fruit and vegetables account for $14, and theremaining $11 is spent on non-alcoholic beverages, such as packaged coffee, soft drinks, andjuices.More information on the relative importance of FPI subgroups, classes, and selected sections isin table 6 of this release.Collection methodsPrices are surveyed by visiting retail outlets in 15 urban areas: Whangarei, Auckland, Hamilton,Tauranga, Rotorua, Napier-Hastings, New Plymouth, Wanganui, Palmerston North, Wellington,Nelson, Christchurch, Timaru, Dunedin, and Invercargill.Fresh fruit and vegetable prices are surveyed weekly, and the remaining food prices aregenerally surveyed between the 8th and 16th day of the month, although sometimes surveyingstarts and finishes earlier or later.Sample designFood prices are collected from about 650 outlets in the 15 surveyed urban areas. Of these, about70 are supermarkets, 30 greengrocers, 30 fish shops, 30 butchers, 50 convenience stores (withhalf being service stations and the other half being dairies, grocery stores, and superettes), 120restaurants (for evening meals), and more than 300 other suitable outlets (for breakfast, lunch,and takeaway food).Statistics NZ collects prices from a sample of supermarkets in each of the 15 FPI pricing regions.This sample is designed to be representative of household purchases in each region. It was lastreviewed in 2011. The sample of other stores was last reviewed in 2013 as part of the rollingreview of outlets.See CPI rolling review of retail outlets for more information.9Accuracy of the dataReview of the food price indexReviews of the FPI are undertaken every three years, as part of wider reviews of the consumersprice index (CPI). The latest review was implemented with the publication of the July 2011 FPI.The review involved reselecting the basket of representative food goods and services,calculating new national expenditure weights, and updating regional population weights.The previous product sample’s final price collection period was June 2011. The updated FPIsample of products also had prices collected in June 2011. An overlapping price collection isnecessary when changing a price index, to ensure changes in basket composition (eg basketadditions, different outlets) are not reflected as price changes.See food price index review: 2011 for more information.Population weightsPopulation weights are used to allocate the national expenditure weights of goods and servicesto the FPI pricing centres. For example, the population weights ensure that a price change inAuckland (which has 33.43 percent of the population weight) would have about three times theeffect on the national FPI than the same price change in Wellington (which has 11.07 percent ofthe population weight).The latest subnational population estimates, which are published annually, are used to calculatethe population weights at each FPI review. Estimates at 30 June 2010 were the latest figuresavailable at the time of the 2011 FPI review. This means that any potential populationmovements following the Christchurch earthquakes in 2010/11 are not reflected in these weights.Population weights will be monitored, and if considered necessary, updated to maintain theaccuracy of the FPI.Statistics NZ publishes food and consumers price indexes for five broad regions based onregional council area boundaries. These indexes are available from Infoshare. These regions areAuckland, Wellington, rest of North Island, Canterbury, and rest of South Island.For the population weights of each region in the FPI, see table 7 of this release.Outlet weightsOutlets are given appropriate weights to reflect their relative importance in terms of householdspending.Elementary aggregate formulaeRegional elementary aggregates are calculated for each of the 15 pricing centres from all pricescollected for an item within that region. Regional elementary aggregates are calculated using a'geometric mean of price relatives', or Jevons formula.The Jevons formula is used to calculate average prices for all food goods and services in thebasket, except fresh fruit and fresh vegetables. The Jevons formula assumes that householdsspend the same amount at each surveyed outlet in each period. This implies that increasedquantities are purchased from outlets showing lower-than-average relative price change and10decreased quantities from outlets showing higher-than-average price change. The calculation offresh fruit and vegetable average prices uses the Dutot formula.Information about the Food Price Index gives more information on the Jevons and Dutotformulae (see elementary aggregate formulae).'On special' pricesItems that are 'on special' are included in the FPI at the price levels observed at the time of pricecollection. Quantity specials (for example, three loaves of bread for $5.00) are also taken intoaccount (as the price per loaf for the special is usually lower than the price of a single loaf).Where discounted prices are available only to customers who belong to discount schemes, thisis represented in the FPI by collecting these prices at some outlets within a region, but notothers.Consistency with other periods or datasetsImpact of the Christchurch earthquakes on price collectionFollowing the Christchurch earthquake on 22 February 2011 price movements for the rest ofNew Zealand were used to calculate price movements in Christchurch for the March 2011 FPI.About half the prices used to calculate the June 2011 FPI had been collected before the 13 Juneearthquakes; collection was completed on 20 and 21 June, two working days later than otherregions where we collect prices for the FPI.Index baseThe FPI has an index reference period of the June 2006 month (=1000). This is the benchmarkto which prices in other periods are compared (eg if the index number in a later period is 1150,prices have increased by 15.0 percent since the index reference period). Prices for later periodscan also be compared in the same fashion.Seasonal adjustment of prices – fresh fruit and vegetablesUntil the June 2006 month, fresh fruit and vegetable items that exhibited a seasonal pattern wereadjusted to remove the effect of normal seasonal change. From the July 2006 month onwards,the FPI incorporates seasonally unadjusted prices for fresh fruit and vegetables. This change isin line with a recommendation made by the 2004 CPI Revision Advisory Committee.The ongoing, fully unadjusted FPI is linked at the June 2006 month to the previously publishedFPI, which is partly seasonally adjusted. As such, care is required when comparing annualmovements over this transition period. Annual movements calculated over the annual periodencompassing the June 2006 month were based on fully unadjusted index numbers for the latestmonth, compared with adjusted index numbers for fresh fruit and vegetables for the same monthof the previous year.Reconciling the FPI and food group of the CPIWhen comparing the FPI and the food group of the CPI, strictly speaking, the quarterly foodgroup index number is not the average of the relevant three monthly FPI numbers. There aresome technical differences between the monthly FPI indexes and quarterly indexes.See Food prices in the consumers price index and food price index for more information.11Interpreting the dataSeasonal availability of fruit and vegetablesFruit and vegetable prices are reflected in the FPI when there is enough produce available toestimate representative average prices. For example, prices for nectarines are historically notincluded in the April and May FPI. Similarly, prices for strawberries are not included in the Mayand June FPI. This is because not enough prices can be collected from stores during thesemonths. No price change is shown in the FPI for these items during these months. Whenproduce returns to sufficient levels, the prices are again reflected in the FPI. Price movementsthen reflect the price change from the month that the item was last included to the current month.Weighted average retail prices of selected food itemsTable 3 contains a selection of weighted average retail prices for the current and previousmonths. These weighted average retail prices were calculated from prices collected in the June2006 month. Subsequent months' weighted average prices are then calculated by applying priceindex movements for the relevant items. These are not statistically accurate measures ofaverage transaction price levels, but are reliable indicators of percentage changes in prices.More informationSee information about the Food Price Index.LiabilityWhile all care and diligence has been used in processing, analysing, and extracting data andinformation in this publication, Statistics NZ gives no warranty it is error-free and will not be liablefor any loss or damage suffered by the use directly, or indirectly, of the information in thispublication.TimingOur information releases are delivered electronically by third parties. Delivery may be delayed bycircumstances outside our control. Statistics NZ does not accept responsibility for any suchdelay.Crown copyright©This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. You arefree to copy, distribute, and adapt the work, as long as you attribute the work to Statistics NZ andabide by the other licence terms. Please note you may not use any departmental orgovernmental emblem, logo, or coat of arms in any way that infringes any provision of the Flags,Emblems, and Names Protection Act 1981. Use the wording 'Statistics New Zealand' in yourattribution, not the Statistics NZ logo.12ContactsFor media enquiries contact:Chris PikeWellington 04 931 4600Email: info@stats.govt.nzFor technical information contact:Sam Norman or Sarah WilliamsWellington 04 931 4600Email: info@stats.govt.nzFor general enquiries contact our Information Centre:Phone: 0508 525 525 (toll-free in New Zealand)+64 4 931 4600 (outside New Zealand)Email: info@stats.govt.nzSubscription service:Subscribe to information releases, including this one, by completing the online subscription form.Correction notifications:Subscribe to receive an email if a correction notice is published for Food Price Index.Unsubscribe to correction notifications for Food Price Index.Subscribe to all to receive an email if a correction notice is published for any of our informationreleases.Unsubscribe to all if you change your mind.13TablesThe following tables are available in Excel format from the 'Downloads' box. If you haveproblems viewing the files, see opening files and PDFs.1. Food price index, subgroups2.01 Food price index, subgroups, classes, and selected sections – index numbers2.02 Food price index, subgroups, classes, and selected sections, percentage change fromprevious month2.03 Food price index, subgroups, classes, and selected sections, percentage change fromsame month of previous year3. Weighted average retail prices of selected food items4. Contributions to food price index and percentage changes, by subgroup, class, orselected section5. Distribution of national item-level index movements from previous month6. Food expenditure weights, by subgroup, class, or selected section7. Population weights, by region/pricing centreSupplementary tablesThe following tables are available in Excel format from the 'Downloads' box. These tablesprovide longer time-series information than the tables above. Given the long time-series natureof the tables, they are not suitable for printing.1.Food price index, subgroups2.01 Food price index, subgroups, classes, and selected sections – index numbers2.02 Food price index, subgroups, classes, and selected sections, percentage change fromprevious month2.03 Food price index, subgroups, classes, and selected sections, percentage change fromsame month of previous yearAccess more data on InfoshareInfoshare allows you to access time-series data and organise it in the way that best meets yourneeds.Use InfoshareFor this release, select the following categories from the Infoshare homepage:Subject category: Economic indicatorsGroup: Consumers Price IndexThe FPI series are listed immediately after the CPI series. Additional information includes:index series for the FPI and its subgroups, classes, and selected sectionsthe FPI for the 15 pricing centres and five broad regionsnon-standard aggregations of indexes (eg fresh fruit and vegetables)historical seasonally unadjusted index seriesaverage prices for a selection of items in the FPI basket.14The time series can be downloaded in Excel or comma delimited format. Percentage movementscan be calculated using the following formula:((Index number for later period minus index number for earlier period) divided by index numberfor earlier period) multiplied by 100.See more information about Infoshare.15