Okay, what you are planning sounds good, Statistics NZ - but we still need more.
Sorry to sound ungrateful but that's my immediate reaction to news that our crown-controlled statistical information provider is moving to provide more timely pricing data.
To simplify enormously what is proposed, at the moment Stats NZ produces monthly pricing information (on food and rent) that comprises about 30% of the make up of the Consumers Price Index - our accepted measure of inflation. From November 14 Stats NZ will be expanding this to include further items, the upshot being that we'll now get a monthly snapshot of pricing information that makes up about 44% of the CPI.
Well, that's better, of course. But how about as close to 100% of that CPI information as possible, every month? That would align us with other countries - Australia, for example which produces a monthly 'CPI Indicator' alongside the fully quarterly CPI information.
We should do this too. Absolutely.
And I will add a further one in here, which is very much related - what about GDP figures?
Like the CPI data, our GDP information is produced quarterly. But the GDP info is nothing like as up to date by the time we see it.
The CPI data typically comes out say two-and-a-half to three weeks after the end of the quarter.
But the GDP data doesn't appear till damn near the end of the NEXT quarter.
As an example, we got our eyes on the September quarter CPI figures in this past week - but we won't see September quarter GDP figures till nearly midway through December, at which point most eyes will be on the Christmas break.
Does our lack of timely data of this nature make us unusual? Yes, it does. As the IMF pointed out in its annual review of New Zealand this year:
"The lack of a monthly CPI series makes New Zealand an outlier among advanced economies and is holding back a timelier formulation and assessment of monetary policy."
The Reserve Bank has conceded it didn't react fast enough to the post-pandemic explosion in inflation. Would more timely information have helped?
It's worth just having a quick look back to mid-2021. The March quarter CPI had shown us having an annual inflation rate of 1.5%. Remember the RBNZ's inflation target is a range of 1% to 3%. So, 1.5% is just fine and dandy.
The March quarter 2021 figures came out in April and then in late May the RBNZ produced its Monetary Policy Statement in which it forecast annual inflation as of the June quarter 2021 - that we were almost two thirds of the way through by that stage - of 2.6%, so yes, up a fair bit. But it then forecast inflation to FALL in subsequent months.
Anyway, as the time for release of the June quarter CPI figures got closer, the country's bank economists were having their picks and they reckoned 2.8% to 3% could be the figure. July 16 told the actual story. It was 3.3%. All hell broke loose. That CPI release was actually two days AFTER the RBNZ had reviewed the OCR and left it UNCHANGED on the emergency setting of 0.25%.
It will show as a historical anomaly that the RBNZ did NOT hike the OCR at its next review in August either. But that was solely because confusion reigned as Auckland experienced its outbreak of Covid Delta the day before the RBNZ review! The hikes duly commenced in October 2021, stopping only (at least for now) in May of this year with the OCR at 5.5%.
Now, I'm not trying to say that monthly CPI inflation would have enabled the RBNZ to magically stop inflation in its tracks - but when you are dealing with what very soon became a runaway train (the inflation, I mean), every moment counts. The longer a country has high inflation the more the risk it becomes seriously ingrained as the population becomes 'accustomed' to it and incorporated inflation into their future (pricing) decisions.
Our annual rate of inflation, we found out in the past week, dropped to 5.6% as of the September quarter, down from 6.0%. That's the first time since December 2021 - getting on for two years - that we've had an annual inflation figure without either a '6' or a '7' at the front of it. Time will tell whether we can get inflation back into its 1% to 3% box.
So, anyway, time for some more timely data. I reckon we need a monthly CPI Indicator and also some form of 'early' GDP indicator that comes out as soon as possible after the quarter in question finishes. But how do we do this?
National Party deputy leader and finance minister presumptive Nicola Willis has frequently challenged RBNZ Governor Adrian Orr on our rates of inflation being higher than other countries and slower to fall. Well, she is about to be in a position to do something about it.
The obvious question is, what resources would Stats NZ need to be able to produce this more timely information?
As per its 2022 annual report, Stats NZ has about 1500 staff.
In the 2023-24 Budget, Vote Statistics was allocated just under $266 million, which included nearly $45 million to finish off the 2023 Census. There was also around $30 million for capex and services to other agencies.
And then the remainder, of a little over $191 million was allocated thus:
• nearly $69 million for the delivery of data and statistical information services relating to business and the economy
• over $84 million for delivery of data and statistical information services relating to the population, household economics, social conditions (including child poverty), the labour market, and the environment
• just over $38 million for the coordination of statistical and data services for government, through System Leadership of the Official Statistics System (OSS) and Stewardship of the Government Data System; statistical and data management advice; provision of access to official statistics; oversight of the IDI; and the provision of ministerial services
As a matter of interest, in the last National Government Budget for 2017-18, this was the comparable breakdown of a total of just over $121 million:
• A total of nearly $52 million for the delivery of data and statistical information services relating to business and the economy.
• A total of just under $42 million for the delivery of data and statistical information services relating to population, environment, household economics, social conditions, and the labour market.
• A total of just under $28 million for system leadership for data and analytics across the public sector, oversight of the Integrated Data Infrastructure (IDI), statistical and data management advice and the operation of access channels.
Based on those figures there does appear to have been quite a switch during the Labour Government in terms of resources put toward what could be loosely described as 'social' data and away from the business and economic data.
I'm a data nerd. For me, the more data the merrier about anything. But what is the new National-led Government likely to think?
It's quite possible there would be a push to adjust priorities.
Watch this space.
But whatever, I would just like to see Stats NZ given the resources to produce timely information of the type I've outlined in this article.
Our key economic planners would be grateful and, ultimately, so should we be. This type of information is not a 'nice to have' - it is a 'must have'.
*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.