Roger J Kerr calls for a comprehensive study into the current components of CPI to disentangle 'technology advances' from 'price movements' to ensure it is still fit-for-purpose

Right on Roger. EC101 a free market satisfies demand at the lowest possible price coupled with the obvious fact that advancing technology is continually finding ways to produce goods cheaper and cheaper. This means that prices in general should be getting cheaper and cheaper. Our economic imperative that inflation must be 2-3% is completely at odds with with what our economy should be doing. We have had 8 years of flogging a dead horse all round the world with low interest rates and still seem little further ahead. It can almost be taken as proof that under these conditions this approach does not work and it is past the time that our leaders faced the facts of this and applied some fresh thinking. I suspect that the only reason that they stick with the present model at the low end of the inflation spectrum is for the benefit of the banking sector. No arguments with the model at the high end of the inflation range where it has been proven to work.

Great view point Roger and spot on analysis ...Our markets dynamics are different from Europe and even from the US ... your call to review CPI measurement is very valid one

For the RBNZ to be targeting 1-3% in the currently world economic environment is nonsense they have failed to continue to cutting rates is not going to change the CPI but simply distort many other already highly challenged parts of the economy. In the highly unlikely event of $100 oil (perhaps a war) deal with it then

Roger, am afraid I don't agree with many assertions you make in your article. Firstly, Japan is by most measures doing very nicely. They have the lowest unemployment in the world, and have printed themselves to trillions of the world's assets while keeping their currency at a competitive level. Japan's current account remains positive even with the electricity shock caused by their tsunami. They have also printed away over half of their government debt. Japan hasn't caused inflation because they don't really care about inflation; they only pretend to do so; while they are laughing themselves to all the free assets mentioned above. The world should be screaming at them to lift consumption, which would be relatively easy to do. Did they need to go to negative rates? Only to keep their currency competitive- it was nothing to do with inflation really.
Separately you talk of technology led deflation, when really deflation has been caused by massive over investment, largely in China, but also elsewhere, supported by the very low interest rates the world sees.
In NZ the interest rates have manifested themselves in booming property prices.
Here it would seem very helpful to consider other targets- in my view fullish employment, a balanced current account, and an inflation target.
More importantly, the RBNZ should have the flexibility to drive how and how much money is printed, and broadly what that printed money is spent on. The current paradigm forces all our printed money through the mortgage system, and that is neither efficient nor does it have the desired effects much of the time.
Japan is not perfect, but we could learn some things from them.

I agree Japan has effectively printed wealth where as we have indebted ourselves to create money with our property bubble.

Few though ask the question about the reliance on central planning for the running of a free market economy.

and whats so wrong with deflation I got a 0.5% pay rise I can't handle any inflation.