Newspapers, books, and stationery in the CPI

The newspapers, books, and stationery subgroup of the consumers price index (CPI) had an expenditure weight of 1.22 percent at the June 2011 quarter. The sources and methods used to compile this subgroup are explained in this article.

Position in the CPI structure

The recreation and culture group of the New Zealand Household Expenditure Classification represented 9.12 percent of the expenditure in the CPI at the June 2011 quarter. The newspapers, books, and stationery subgroup makes up about 13 percent of expenditure in this group. Table 1 outlines the expenditure weights of the subgroup and its classes.

Table 1

The books class represents all books. Within this class we price leisure books (eg adult top 10 novels, travel guides, and top 10 e-book novels), children's top 10 titles, textbooks, and instruction books (eg gardening, cooking, health, and technical books).

We price the top 10 book titles for children, adult novels, and e-book novels because they cover a large share of spending, and because there are continual changes in popularity as new titles are released. For the other books, we track specific titles. Within the books class, leisure books make up over half of the weight, children's books one-fifth of the weight, and textbooks and instruction books about one-eighth of the weight each.

The newspapers and magazines class includes both a 12-month subscription for a delivered local daily paper, and single-paper prices for weekday, weekend, and Sunday papers. For magazines, we price a six-month subscription for one, and a 12-month subscription for another, current affairs magazine. Per issue prices are also collected for 14 other magazines of various types. Within this class, newspapers make up about three-fifths of the weight, and magazines two-fifths of the weight.

The stationery and drawing materials class includes items such as a student binder refill, ballpoint pens, cellulose tape, and computer printer paper and ink.

For a full list of items in the newspapers, books, and stationery subgroup, see the 'basket' spreadsheet in the 'available files' section of Consumers price index review: 2011.

Expenditure weight estimation

Information from the 2009/10 Household Economic Survey (HES) and other sources was used to determine the relative importance of the recreation and culture group. The HES collected detailed information on the spending patterns of about 3,100 households. This survey was the primary source of information about newspapers, books, and stationery. For the newspapers and magazines class, data from other sources was also used to determine their relative importance.

For the books class, the HES data was used to estimate overall expenditure. Proportional data from the Nielson Company was then used to split this expenditure into the different types of books (eg leisure books and children's books).

For the newspapers and magazines class, information from the New Zealand Audit Bureau of Circulation website was used to give circulation figures. Expenditure on each newspaper and magazine was estimated from this data – along with per issue prices and the number of issues published a year. This was summed to give total expenditure for all newspapers and magazines. An adjustment was then made to remove any expenditure on these items that is out of scope of the CPI (eg expenditure by businesses or international visitors). For some magazines, such as men's magazines, circulation figures were not available from the New Zealand Audit Bureau of Circulation. For these magazines, information on their relative importance overseas was used to estimate expenditure.

The relative weight of the newspapers, books, and stationery subgroup fell from 1.35 percent in 2008 to 1.22 percent in 2011. This decrease reflects lower estimated expenditure on newspapers and magazines.

Item and sample selection

The CPI basket of goods and services is reviewed once every three years to ensure it continues to reflect household purchases. In the latest CPI review, items were added to and removed from the newspapers, books, and stationery subgroup. E-books were added to the books class and dictionaries were removed; and cellulose tape replaced envelopes in the stationery and drawing materials class.

E-book readers will be added to the CPI basket in 2012. However, they will be added to the audio-visual and computing equipment subgroup rather than the books class.

The top 10 book lists used for price collection are updated every quarter, based on sales information collected by Nielsen Book Services.

Price collection

Prices for the newspapers, books, and stationery subgroup are collected in three ways: field collection, postal surveys, and Internet collection. Most books and magazines are collected by quarterly field collection at retail outlets by Statistics NZ price collectors. The only exceptions are e-books and magazine subscriptions. E-book prices are collected from the Internet, and current affairs magazine subscriptions are collected by postal surveys. Newspaper prices are collected by monthly field collection, while stationery and drawing materials are collected by either monthly or quarterly field collection.

Prices from field collection are collected from suitable retail outlets in the 15 CPI urban areas: Whangarei, Auckland, Hamilton, Tauranga, Rotorua, Napier-Hastings, New Plymouth, Wanganui, Palmerston North, Wellington, Nelson, Christchurch, Timaru, Dunedin, and Invercargill. Top 10 book and single-issue magazine prices are collected from only three CPI urban areas – Auckland, Wellington, and Christchurch. These three regions represent book and single-issue magazine prices in the Upper North Island, Lower North Island, and the South Island, respectively.

E-book and magazine subscription prices are collected in the middle of the middle month of the quarter. E-book prices are collected from online sellers based in New Zealand and overseas.

Estimation

For newspapers and some stationery items, prices are collected monthly. Regional average prices are then calculated by outlet-weighting the monthly prices collected at different outlets within each region. The monthly average prices are used to calculate quarterly average prices – by weighting each monthly average price by the number of days in the month of collection.

The remainder of the newspapers, books, and stationery subgroup prices are collected quarterly. Regional average prices for these items are calculated by outlet-weighting the prices collected at different outlets within each region. All regions are aggregated to obtain the New Zealand quarterly item index – by weighting together regional price movements from the base quarter (June 2011) to the current quarter, using regional population weights.

Prices for e-books are national prices and are used to directly calculate the New Zealand item-level index. This is because these prices are collected from the Internet and apply nationally with no regional variation.

Quality assurance

The CPI aims to measure the price change of the same product at each sampled outlet or business over time. In practice, sampled products may become unavailable, change, or become unrepresentative. When this occurs, there may be a change in quality and an adjustment is made so that only the estimated 'pure' price change is shown in the CPI. For example, a price increase (decrease) that is deemed to be purely the result of better (poorer) quality materials or service would be adjusted for and the price change would not be shown.

For the top 10 books, the titles we price can change from quarter to quarter. The constant quality being priced here is 'top 10 books', so no adjustment is made for the change in titles within the top 10 list. This means that, in the short term, there may be some volatility in the quarterly average prices as the top 10 titles change. However, this pricing indicator should adequately reflect long-term change in top 10 book prices.

External influences on prices

The stationery and drawing materials class shows a cyclical pattern, with price falls in the March quarters. These falls reflect back-to-school specials that occur at the start of the new school year.