In real terms
From @LIVENewsDesk on Twitter, and then Stuff, we have record nominal prices for petrol.
Adjusted for inflation, the price is still definitely lower than in mid-2008, when it got to $2.18, which is $2.41 in today’s money, and driving is much cheaper than in was in the mid-1980s.
Also, neither Stuff nor the AA still seem to know about the government’s independent petrol-price monitoring system. Their estimate of the importer margin has been stable since May, but is well above recent historical levels.
Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »
A query on this Thomas. If they are going to use the inflation adjusted figure, then it would not make sense without also running similar figures for wages because the essence of the story is what people can afford…correct?
11 years ago
You could adjust for income instead of for CPI, and that would make sense. The (linked) Reserve Bank CPI calculator also has an option to use a wages index, and that gives $2.46 as the equivalent of the 2008 peak price, or you could use median weekly income from salary and wages (which gives about $2.45), median household income or the minimum wage (which gives $2.50 as the equivalent), or GDP per capita, depending on your preferences. You might even worry that wage statistics are being confounded by an aging population and want age-adjusted median income, in which case you’re in for some hard work computing it. Or you could stick with inflation measures but use the Producer Price Index, or the GDP deflator, instead of the CPI.
Any of these could make some sense, and all the ones I’ve looked at indicate that petrol prices are lower than 2008, and significantly lower than the mid-1980s. What doesn’t really make sense is ignoring the fact that dollars are getting smaller over time. It’s like comparing US and NZ prices ignoring the fact that ‘dollar’ doesn’t mean the same thing in both countries.
11 years ago