Source: MIL-OSI Submissions
Impacts of COVID-19 on the 2020 CPI re-weight
11 September 2020
On 23 October, we will be releasing the updated weights for the consumers price index (CPI) as part of the three-yearly review of the CPI weights and basket.
The updated weights will be based on the 2018/19 Household Economic Survey. These weights will remain in place until the September quarter 2023 CPI release, when we would expect to update them again, using data from the 2021/22 Household Economic Survey: Expenditure.
We re-weight the CPI every three years to ensure we pick up changing consumer consumption patterns. If we don’t do this, we can miss the fact that consumers can, and do, substitute away from more expensive items towards cheaper alternatives. This can lead to an over-statement in the CPI over time (See Analytical retrospective superlative index based on New Zealand’s CPI: 2017).
Ordinarily, a three-yearly re-weight of the CPI is sufficient to pick up changing consumer expenditure patterns. With COVID-19, supply and demand factors are likely to speed up this rate of change – with some items more affected than others.
To read this paper on our website:
