Information for Teachers

Balance of Payments
Consumer Price Index
How to use Table Builder

 

Balance of Payments

What is the balance of payments?

• The balance of payments is a statistical statement that records the transactions of one country with the rest of the world.
• The balance of payments has three accounts: the current account, the capital account and the financial account.

Why produce the balance of payments?

• The International Monetary Fund (IMF) focuses on international financial stability and growth.
• The IMF requires member countries to produce balance of payments and related statistics to enable them to monitor performance in respect to the Fund's objectives.
• Before foreigners will lend money or invest in New Zealand they want information about the risk. The balance of payments is an important economic indicator in an open economy.

What the balance of payments is made up of?

• Current account - records transactions in goods, services, income and current transfers.
• Capital account - covers all transactions that involve the receipt or payment of capital transfers and the acquisition or disposal of non-produced, non-financial assets.
• Financial account - royalties and government services involving a country’s claims on (assets), and liabilities to, the rest of the world. Both sides can have net increases (positive flows).

Where do I find the latest information on the balance of payments?

Balance of Payments and International Investment Position information releases

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Consumer Price Index

The Consumers Price Index (CPI) is used to measure the changes in the prices of goods and services purchased by New Zealand households over a period of time.

This change in prices is sometimes called inflation. Supermarkets, clothing stores, department stores, liquor outlets, doctors' surgeries, travel agents, service stations and other providers of goods and services help supply Statistics New Zealand with the information to calculate the CPI.

Where possible, prices are collected for exactly the same goods and services each time. This ensures that changes in the cost of goods and services over time are not due to changes in the quantity or quality of the goods and services purchased. These changes are called 'pure' price changes.

Sometimes there is a change in the quantity and quality of the goods but the prices remain the same, eg the packaging of a particular brand of chocolate biscuit changes and the number of biscuits in the packet is reduced but the price remains the same. This is, in effect, a price increase and adjustments are made to record a price increase in the CPI.

CPI Revisions
The CPI is revised regularly to ensure the goods and services surveyed reflect the current spending habits of New Zealand consumers. Revisions are carried out every three years, the latest review being September 2008.

The CPI revisions look at new items which may need to be included, new weights and sometimes whether the CPI needs to be re-based. After the 1999 revision, for example, the CPI now includes avocados, capsicums, taro, Internet charges and cell phone charges. The June 1999 revision included a rebase to June 1999 (=1000). New items included in the September 2002 CPI revision, for example, were water charges and refuse charges.

Calculating Changes
A price index tells us nothing about actual price levels. The index measures price movements. For example, if we calculate the percentage change using the index numbers we can see how the prices have moved.

For example

This shows us that between September 2007 and September 2008, prices have increased by 2.4 percent.

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How to use Table Builder

This is how a table looks in Table Builder. It doesn't matter what topic you have selected, the table will have this look. Anything that is underlined in the table means you can click on it and it will expand the topic. For example, if you clicked on Total in the Age Group row it will expand the table to show all the different age groups.

Building a table in Table Builder is easy and can be explained in our online tutorials in this link.

Useful hints
Here are some quick hints to help you build a table that only has the data you need in it.

• Use the Selection Menu.
• Click on each Variable and select the items you want in the table.
• Click on View Table to check what the table looks like. You can do this as often as you want.
• If you want an item in the table, make sure there is a tick in the box next to it.
• If you want to take an item out of the table, remove the tick .