Business Price Index Redevelopment Project

The Business Price Index (BPI) redevelopment project has two objectives: to redevelop the BPIs and to collect commodity data for use by National Accounts.

Collecting commodity data provides information on the supply and use of goods and services (commodities) by economically-significant enterprises operating within New Zealand. This information is used to balance production and expenditure estimates of Gross Domestic Product (GDP) within an input-output framework, which requires the compilation of tables that detail the supply and use of commodities by industry.

This information is also used to establish lower-level weights for the BPIs to be used as deflators in the production of a chain-volume measure of GDP.

The last redevelopment of the Producers Price Index (PPI) was undertaken between 1995 and 1998 and focused on the redevelopment of the indexes at the industry level. The current redevelopment is focusing on the commodity indexes, and items to price within these commodities, which are two levels below the industry level in the hierarchical structure. This is so that the regimes remain representative of the current purchasing and selling patterns of the industry indexes within the PPI.

The current redevelopment project was initiated after a review undertaken in 2002 by David Collins from the Australian Bureau of Statistics, which highlighted several areas where existing practices did not meet the required standards. His recommendations included:

• exclusion of notional transactions and non-market prices
• clarity on the use of basic or purchaser prices
• the use of actual market transaction prices
• improving international compatibility of the PPI indexes
• the use of specification pricing to show pure price change.

The following table lists all the indexes that have been redeveloped, tested, and implemented:

The current redevelopment is now provisionally complete.

We are currently moving both the CDC data and BPIs over from the Australian New Zealand Standard Industrial Classification 1996 (ANZSIC96) to the Australia New Zealand Standard Industrial Classification 2006 (ANZSIC06).