Go to National Library of New Zealand Te Puna Mātauranga o Aotearoa
Volume 56, 1926
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6. The Spread of Prices in Recent Years.

While index numbers of wholesale prices are recognized as efficient instruments for measuring changes in the value of money as compared with goods in general, their efficiency for particular purposes is not so clear. The recent disputes in New Zealand over the adequacy of the Government Statistician's index number of retail prices as a measure of changes in the cost of living, while generally based upon wrong conceptions of the purposes and methods of index numbers, have proved the difficulty of devising an accurate index number of retail prices as a basis for wage calculations.

Wholesale prices, as a measure of monetary fluctuations, are not open to the same criticism; but, as has been indicated above, particular groups of commodities may diverge from the general movement because of special causes peculiar to those commodities. As monetary inflation raises the general level of prices sharply, this tendency to dispersion or spread of particular prices about the average is greatly increased, and is indeed one of the chief symptoms of the economic dislocation which always accompanies price-inflation. ‡

An important example of this tendency is shown in the index number of wholesale prices calculated for New Zealand by the Government Statistician, and is summarized by Table 4 given below.

The tendency for prices to spread as inflation proceeded in the post-war boom is very noticeable when these series are plotted on a graph, and more noticeable still is the fact that the important pastoral products have risen less and fallen to lower levels since the slump than the merchandise we can import. This divergence is not the least of the handicaps under which the primary producer of the Dominion is suffering to-day. The extent to which the prices of products like building-materials and coal have soared away from export values may be taken also as one indication of the extent to which artificial interferences, such as protective tariffs, Government subsidies and advances, commercial combinations and industrial strife, have kept the level of domestic prices in New Zealand above the level of those products which have to face competitive world markets. This increased spread of the price-level has affected the calculation of export productivity considerably in the past few years.

By using the higher index number of general prices to correct the values of export products the quantity exported has been made to appear unduly

[Footnote] ‡ Cf. Statistical Journal, March, 1924, “The Inter-relation and Distribution of Prices and their Incidence upon Price Stabilization,” article by Norman Crump (editor, Financial Times).

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low. There was during the war and the years immediately following the war a decided and indisputable tendency towards lowered productivity, which was masked by higher levels of prices; but since the slump productivity has increased again. This is due partly to the impetus given to dairying in the past few years, but mainly it is due to the heroic response of the small farmers of the Dominion to conditions of financial adversity.

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Table 1.—Annual Imports and Exports of New Zealand, 1853–1923, compared with Growth of Population.
(Statistics taken from official publications.)
Year. Imports. Exports. Population.
£00,000 omitted. £00,000 omitted. 0,000 omitted.
1853 6 3 3
1854 9 3 3
1855 8 4 4
1856 7 3 5
1857 10 4 5
1858 11 5 6
1859 16 6 7
1860 15 6 8
1861 25 14 10
1862 46 24 13
1863 70 35 17
1864 70 34 17
1865 56 37 19
1866 59 45 20
1867 53 46 22
1868 50 44 23
1869 50 42 24
1870 46 48 25
1871 41 53 27
1872 51 52 28
1873 65 56 30
1874 81 53 34
1875 80 58 38
1876 69 57 40
1877 70 63 41
1878 88 60 43
1879 84 57 46
1880 62 64 48
1881 75 61 50
1882 86 67 52
1883 80 71 54
1884 77 71 56
1885 75 68 58
1886 68 67 59
1887 62 69 60
1888 59 78 61
1889 63 93 62
1890 63 98 63
1891 65 96 63
1892 69 95 65
1893 69 90 67
1894 68 92 69
1895 64 86 70
1896 71 93 71
1897 81 100 73
1898 82 105 74
1899 87 119 76
1900 106 132 77
1901 118 129 79
1902 113 136 81
1903 128 150 83
1904 133 147 86
1905 128 157 88
1906 152 181 91
1907 173 201 93
1908 175 163 96
1909 157 197 98
1910 171 222 100
1911 195 190 103
1912 210 218 105
1913 223 230 108
1914 219 263 110
1915 217 317 110
1916 263 333 110
1917 209 316 110
1918 242 285 111
1919 307 540 112
1920 616 464 121
1921 429 448 124
1922 350 427 127
1923 435 460 129
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Table 2.—Volume of New Zealand Imports and Exports per Head of Population, 1861–1923.
Column 2: Total values of imports divided by mean population for the year.
Column 3: McIlraith's index, 1861–90; Government Statistician's index, 1891–1923.
Column 4: Annual index obtained by dividing column 3 into column 2. Three-year moving average to smooth annual fluctuations and disclose general trend.
Column 5: Total values of exports divided by mean population for the year.
Column 6: Identical with column 2.
Column 7: Annual index obtained by dividing column 6 into column 5. Three-year moving average to smooth annual fluctuations and disclose general trend.
1 2 3 4 5 6 7
Year. Imports per Capita. Index of Wholesale Prices. Volume of Imports per Head. Exports per Capita. Index of Wholesale Prices. Volume of Exports per Head.
Annual Index. Three-year Moving Average. Annual Index. Three-year Moving Average.
1861 2.50 184 136 1.40 184 71
1862 3.54 186 190 180 1.85 186 100 93
1863 4.12 193 214 205 2.06 193 107 103
1864 4.12 195 211 194 2.00 195 103 104
1865 2.95 189 156 172 1.95 189 103 106
1866 2.95 200 148 144 2.25 200 112 109
1867 2.41 187 129 132 2.09 187 112 109
1868 2.17 184 118 125 1.91 184 104 108
1869 2.08 164 127 122 1.75 164 107 112
1870 1.84 154 120 116 1.92 154 125 121
1871 1.52 150 101 113 1.96 150 131 125
1872 1.82 154 118 117 1.85 154 120 121
1873 2.17 164 132 133 1.86 164 113 110
1874 2.39 161 148 141 1.56 161 97 104
1875 2.11 148 144 138 1.53 148 103 100
1876 1.72 140 123 129 1.42 140 101 104
1877 1.71 144 119 131 1.54 144 107 104
1878 2.05 135 152 138 1.40 135 104 103
1879 1.83 127 144 132 1.24 127 98 101
1880 1.29 130 100 121 1.33 130 102 99
1881 1.50 125 120 118 1.22 125 97 102
1882 1.65 122 135 127 1.29 122 106 105
1883 1.48 118 125 127 1.31 118 111 109
1884 1.38 115 120 120 1.27 115 110 109
1885 1.29 111 116 114 1.17 111 105 107
1886 1.15 108 106 107 1.14 108 106 108
1887 1.03 103 100 100 1.15 103 112 117
1888 0.97 103 94 95 1.28 103 124 124
1889 1.01 111 91 93 1.50 111 135 135
1890 1.00 107 93 96 1.55 107 145 144
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1891 1.03 99 104 102 1.52 99 153 149
1892 1.07 97 110 107 1.46 97 150 147
1893 1.03 97 106 107 1.34 97 138 144
1894 0.99 93 106 104 1.33 93 144 139
1895 0.91 92 99 104 1.23 92 134 139
1896 1.00 94 106 108 1.31 94 139 140
1897 1.11 94 118 113 1.37 94 146 144
1898 1.11 97 114 120 1.42 97 146 156
1899 1.15 89 129 131 1.56 89 175 169
1900 1.38 92 150 146 1.71 92 186 179
1901 1.49 93 160 151 1.63 93 175 178
1902 1.40 97 144 155 1.68 97 173 180
1903 1.54 95 162 158 1.81 95 191 183
1904 1.55 92 168 159 1.71 92 186 186
1905 1.45 99 146 160 1.78 99 180 187
1906 1.67 102 164 164 1.99 102 195 196
1907 1.86 102 182 175 2.16 102 212 192
1908 1.82 101 180 177 1.70 101 168 197
1909 1.60 95 168 174 2.01 95 212 202
1910 1.71 98 174 178 2.22 98 226 211
1911 1.89 99 191 183 1.84 99 186 204
1912 2.00 104 183 192 2.08 104 200 198
1913 2.07 103 201 189 2.13 103 207 209
1914 1.99 108 184 180 2.39 108 221 218
1915 1.97 127 155 171 2.88 127 227 222
1916 2.39 138 173 150 3.03 138 219 209
1917 1.90 156 122 139 2.83 156 181 181
1918 2.18 181 121 131 2.57 181 142 195
1919 2.74 183 150 168 4.82 183 263 193
1920 5.09 219 232 183 3.83 219 175 204
1921 3.46 207 167 183 3.61 207 175 178
1922 2.76 183 151 168 3.37 183 184 186
1923 3.37 180 187 3.56 180 198
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Table 3.—Proportions per Cent, of the Total Exports, 1853–1923, Provided by the Main Industries of New Zealand.
(Percentages correct to nearest whole number.)
Year. Pastoral. Mining. Agricultural. Forest. Other.
Per Cent. Per Cent. Per Cent. Per Cent. Per Cent.
1853 22 6 36 36
1854 22 13 24 41
1855 25 22 4 49
1856 46 8 7 39
1857 48 11 5 13 23
1858 55 11 7 9 18
1859 62 5 2 11 20
1860 76 3 4 17
1861 38 55 2 5
1862 29 66 1 4
1863 25 70 2 3
1864 32 55 3 10
1865 31 60 1 8
1866 30 63 2 5
1867 34 58 1 2 5
1868 34 57 3 2 4
1869 32 56 2 5 5
1870 28 57 3 6 6
1871 33 53 3 5 6
1872 52 33 3 6 6
1873 50 35 2 6 7
1874 56 29 6 4 5
1875 60 24 4 3 9
1876 62 22 6 3 7
1877 62 23 4 3 8
1878 58 20 8 3 11
1879 58 19 11 4 8
1880 52 19 14 5 10
1881 49 16 15 5 15
1882 50 14 15 6 16
1883 50 11 18 8 13
1884 56 14 11 7 12
1885 58 14 8 6 14
1886 59 15 7 6 13
1887 61 12 6 7 14
1888 55 13 8 8 16
1889 57 9 11 10 13
1890 59 9 11 10 11
1891 62 11 7 10 10
1892 63 11 9 8 9
1893 62 11 6 9 12
1894 75 11 2 6 6
1895 70 15 4 7 4
1896 72 12 6 6 4
1897 72 11 5 6 6
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1898 73 11 4 7 5
1899 67 14 8 7 4
1900 66 12 9 7 6
1901 62 15 12 6 5
1902 65 16 8 5 6
1903 67 15 5 6 7
1904 68 15 5 5 7
1905 70 15 3 6 6
1906 73 14 2 5 6
1907 76 12 1 5 6
1908 73 14 2 5 6
1909 74 12 5 5 4
1910 79 11 2 4 4
1911 78 11 2 4 5
1912 78 7 5 4 6
1913 81 7 1 4 7
1914 86 5 1 4 4
1915 84 7 2 2 5
1916 88 5 1 2 4
1917 88 4 1 2 5
1918 88 2 3 3 2
1919 91 3 2 1 3
1920 91 2 1 3 3
1921 93 2 1 2 2
1922 91 2 2 3 2
1923 92 2 1 2 2

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Table 4.—Summary of Index Numbers.
Group Index Numbers of Wholesale Prices for the Average of the Four Chief Centres, 1913–22.
(Base: Average aggregate annual expenditure, four chief centres, 1909–13 = 1000.)
Year. Agricultural Products. Wool, Hides, Tallow, Butter, Cheese. General Merchandise. Building-materials. Leather. Coal. Index of General Prices.
1913  967 1047 1055 1063 1126 1038 1032
1914 1021 1116 1089 1120 1184 1004 1077
1915 1580 1297 1202 1217 1348 1019 1269
1916 1487 1401 1317 1444 1470 1145 1380
1917 1517 1466 1447 1772 1806 1369 1555
1918 1845 1466 1685 2148 1900 1478 1809
1919 1868 1515 1796 2067 2066 1647 1834
1920 1987 1651 2340 2440 2974 2052 2185
1921 1590 1576 2192 2460 2105 2228 2071
1922 1430 1335 1831 2176 1773 2124 1832
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