1. What is the Reserve Bank CPI?

The Consumer Price Index (CPI) measures the average change over time in the prices paid by households for a fixed basket of goods and services. The Reserve Bank of New Zealand uses CPI as a key indicator of inflation.

2. How Does the Calculator Work?

The calculator uses the standard CPI formula:

Where:

• Current Period Price — Price of the basket in the current period
• Base Period Price — Price of the basket in the base period

Explanation: The CPI compares the current cost of a basket of goods and services with its cost in a base period.

3. Importance of CPI Calculation

Details: CPI is crucial for measuring inflation, adjusting wages and pensions, and informing monetary policy decisions by the Reserve Bank of New Zealand.

4. Using the Calculator

Tips: Enter the base period price and current period price in NZD. The calculator will compute the CPI value and percentage change.

5. Frequently Asked Questions (FAQ)

Q1: How often does the Reserve Bank of NZ update CPI?
A: Statistics NZ publishes CPI quarterly, while the Reserve Bank monitors it continuously for monetary policy decisions.

Q2: What's included in NZ's CPI basket?
A: The basket includes food, housing, household operation, apparel, transportation, health, recreation, education, and other goods and services.

Q3: How does CPI differ from inflation?
A: CPI measures price changes for a basket of goods, while inflation is the rate at which the general level of prices is rising (often measured by CPI changes).

Q4: Why does the Reserve Bank target CPI?
A: The Reserve Bank aims to keep CPI inflation between 1-3% annually to maintain price stability as part of its monetary policy.

Q5: How is CPI used in wage negotiations?
A: Many wage agreements include CPI adjustments to maintain workers' purchasing power as prices change.