With inflation New Zealand's big economic and political issue over the past couple of years, you might think keeping the key data source that measures inflation up-to-date would be a top priority for Statistics NZ.
However, Statistics NZ's briefing to incoming Minister of Statistics Andrew Bayly, received by incoming Ministers following the formation of a new Government but only publicly released this month, shows Statistics NZ overdue on updating the goods and services included in its Consumers Price Index (CPI).
"We currently do not have the funding available to update the CPI basket to ensure it is fully representative of the goods and services that New Zealand households are purchasing," Statistics NZ's briefing to Bayly said.
"The CPI is typically reweighted every three years, using the [Statistics NZ] Household Economic Survey (HES). The HES was suspended in 2021/22 as a result of COVID-19 restrictions on household interviewing. The data has now been collected for 2022/23, but the development work to update the CPI weights is currently unfunded."
The Reserve Bank's monetary policy remit tasks it with achieving and maintaining annual inflation between 1% and 3% over the medium term, with a focus on keeping future inflation near the 2% mid-point. What does the central bank use to measure inflation? Statistics NZ's CPI.
The CPI measures the changes in prices households pay for goods and services. Price change is measured by tracking the prices of individual items that make up a representative basket of goods and services. Statistics NZ last reviewed the CPI in 2020, with four items added to the CPI basket and 13 removed.
'Internal funding decision' in a time of 'cost pressures'
In comments attributed to Jason Attewell, its General Manager of Economic and Environmental Insights, Statistics NZ told interest.co.nz on Friday the work it needs to do to reweight the CPI basket currently remains unfunded.
"This is an internal funding decision for Stats NZ as we work through our cost pressures. We are aware of the importance of this work to maintain the relevance of the CPI," Attewell said.
Attewell's comments didn't respond to interest.co.nz's question asking how much money is needed to fund this work.
According to Statistics NZ's 2022/23 annual report, it received $366.209 million from the Crown, and had total revenue of $382.325 million. It recorded a net surplus of $420,269, which was returned to the Crown.
Bayly 'engaging with officials'
Bayly told interest.co.nz, via a spokesman, whilst the Statistics NZ work remains unfunded, reweighting the CPI basket is a priority for him.
"Currently the development work to update the CPI weights remains unfunded. The CPI basket reweight is a priority for me, and I am engaging with officials on this work," Bayly said.
After the release of Statistics NZ's latest quarterly CPI data on January 24, Finance Minister Nicola Willis welcomed the annual drop in inflation to 4.7% from 5.6%, noting the Government was "focused on removing excessive inflation from our economy and won't be satisfied until we have."
Willis and the National Party made much of the "cost of living crisis" whilst in opposition, including during the election campaign last year. CPI inflation hit 7.3% in mid-2022, its highest level in 32 years.
"The coalition Government is working hard to strengthen the economy so we can reduce the cost of living and get inflation back under 3%," Willis said in January.
In its briefing to Bayly, Statistics NZ said given "the current financial constraints within government," it's working to get the most value out of its budget and to avoid unnecessary expenditure.
"We are committed to meeting the Government’s expectations for sustainable, efficient spending in delivering public services. We have reduced contractor/consultant spending and are focused on building up capacity and capability within Stats NZ."
With all Organisation for Economic Co-operation and Development (OECD) countries except NZ publishing monthly CPI data, Statistics NZ late last year started releasing new monthly Selected Price Indexes, which make up around 45% of the quarterly CPI.
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