Rail, road, and sea passenger transport services in the CPI

Introduction

The sources and methods used to compile the rail, road, and sea passenger transport class-level indexes of the consumers price index (CPI) are explained in this article. The passenger transport services subgroup of the CPI had an expenditure weight of 2.92 percent at the June 2011 quarter.

The sources and methods used to compile the domestic and international air transport class-level indexes are explained in Domestic and international air transport in the CPI.

Position in the CPI structure

The transport group of the New Zealand Household Expenditure Classification represented 15.12 percent of spending by private New Zealand households at the June 2011 quarter. Spending by those living in private, permanent households within New Zealand is included in the CPI.

The passenger transport services subgroup makes up about one-fifth of spending in this group. The rail, road, and sea passenger transport class-level indexes make up about one-fifth of spending in the passenger transport services subgroup. Table 1 outlines the expenditure weights or relative importance of the subgroup and its class-level indexes.

Table 1

The rail passenger transport class represents all train travel. Within this class, we track urban train fares and we track long distance train fares for three routes. For urban train fares in Auckland and Wellington, we track prices for single-trip and multi-trip concession tickets.

Within the road passenger transport class, we track:

• urban bus fares
• long distance bus fares (excluding coach tours)
• taxi fares
• shuttle fares
• car hire charges.

For urban bus fares, we track prices for single-trip and multi-trip concession tickets. We collect prices from 20 service providers in 15 urban areas: Whangarei, Auckland, Hamilton, Tauranga, Rotorua, Napier-Hastings, New Plymouth, Wanganui, Palmerston North, Wellington, Nelson, Christchurch, Timaru, Dunedin, and Invercargill. We track prices for the most common bus trips in each urban area.

We track long distance bus fares for 12 different routes throughout New Zealand.

For taxi fares, we track the price of a five-kilometre trip, booked by telephone. We monitor prices charged by about 25 providers across the 15 urban areas surveyed for the CPI. For shuttle fares, we track prices for trips between airports and a range of suburban areas from six providers in Auckland, Wellington, Christchurch, and Dunedin.

For car hire, we track prices charged when a New Zealand leisure customer over 25 years old:

• books on the 15th of the current month for the first Friday of the following month
• hires for four days
• picks the car up and returns it to the same depot
• travels up to 400 kilometres.

The price includes all compulsory charges (for example, personal accident insurance).

We track the price of hiring a range of cars. We track hire charges for cars with various engine sizes and body types, both manual and automatic. We collect prices for hiring a vehicle in Auckland, Wellington, Picton, and Queenstown from national and regional car hire companies. These locations were selected so prices are collected for hiring a vehicle at popular airport, port, city, and holiday locations.

The sea passenger transport class represents all ferry and water taxi travel. We track long distance ferry passenger and passenger vehicle fares.

For a full list of items in the passenger transport services 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 transport group within the CPI. The HES collected detailed information on the spending patterns of about 3,100 households.

The relative importance of the passenger transport services subgroup was largely based on sources other than the 2009/10 HES. Sources of information on spending included industry data from key service providers. Car hire, and taxi and shuttle services are the only items within the passenger transport services subgroup where the HES was used to estimate spending.

Spending by those living in private, permanent households in New Zealand is included in the CPI. Data from the International Visitor Survey was used to exclude the amount overseas visitors spent. We also excluded spending by businesses and people not living in private households.
 

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 2011 CPI review, some changes were made to the passenger transport services subgroup. We started tracking prices for flights to Africa and began collecting prices for an additional Asian route. We are now tracking prices for domestic flights on more routes.

The rail, road, and sea passenger transport services in the basket remained unchanged.
 

Price collection

Prices for the passenger transport services subgroup are collected using postal surveys and sourced directly from the Internet.

Most prices are collected by postal survey for the 15th of the middle month of the quarter (for example, 15 February).

Car hire charges are collected by postal survey on a monthly basis. Car hire charges can be volatile because particular travel dates are popular (for example, over the Christmas break).

Long distance ferry passenger and vehicle fares are sourced directly from the Internet on the working day nearest to the 15th of the middle month of the quarter.

Index Calculation

Prices for trips on long distance trains, long distance buses, shuttles, and ferries are used to directly calculate the New Zealand item-level index, as these services are widely used by people who live throughout the country. For example, long distance train trips to and from Auckland would not be weighted by the population of Auckland, as many customers would live in other regions.

Regional average prices for trips on urban buses, urban trains, and taxis are calculated by combining prices within each region. Prices collected in all regions are combined to calculate the New Zealand quarterly item index. This is done by combining regional price movements from the price reference quarter (June 2011) to the current quarter, using regional population shares of the national expenditure weight.

Monthly average car hire prices are used to calculate quarterly average prices by weighting each monthly average price by the number of days in the month in which it was collected. This helps to ensure that particularly cheap, or expensive, months do not have undue influence on quarter-to-quarter price comparisons. Movements in these quarterly average prices are then used to directly calculate the New Zealand item-level index.
 

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 or decrease that is deemed to be purely the result of better or poorer quality materials or service should be adjusted for and the price change not shown.

Changes in the quality of service that passengers receive (for example, changes in reliability or comfort levels) are generally not adjusted for in practice.