Explained: How is inflation measured and how often?

Source: 1News

Inflation hit a 32-year high in New Zealand on Monday, the Consumer Price Index climbing to an eye-watering 7.3%.

The Consumer Price Index (CPI) is a measure of inflation - the changes in the price of goods and services New Zealand households pay for.

So how is the CPI calculated and how often?

A simple way to explain it is with a shopping trolley of everyday items from food like milk, bread and bananas, to other things like clothes and mobile phones. Petrol, transport and power prices are also measured.

The cost of these same goods and services are then compared to their prices a year before to show the change, that being the annual inflation figure. On Monday, that figure was announced to be 7.3%, a 32-year high.

The CPI is calculated four times a year, and in recent times, the inflation rate has been in a steep climb.

In December 2020 the CPI was under 2%. In the second quarter of 2021 it began to rise, reaching over 3% in June of last year. That rise continued and by the end of 2021, the inflation rate was hovering just under 6%. The ascent has continued, reaching 7.3% on Monday.