Aged Care Price Index March 2018

Statistics New Zealand has released the latest Aged Care Price Index[1] (ACPI) for the March 2018 quarter. The ACPI rose 2.8% from December 2017 to March 2018.  The increase over the year to March was 7.8%.  This dwarfs the 1.1% increase in the CPI over the year.

ACPI March 2018 1

The ACPI for March Quarter 2018 again shows the effect on ARC providers’ costs of the Care and Support Workers (Pay Equity) Settlement Act (2017), which took effect on 1 July 2017. As we have noted previously, Statistics NZ’s methodology for calculating the ACPI smooths the boost in costs due to pay equity out over four quarters.  This means the June 2018 ACPIs will also reflect the July 2017 pay rise. Total wage costs account for around 71% of all costs to providers in the sector. 

Price increases for pharmaceutical products have also contributed to the recent rise in the ACPI, but some offset came from decreased prices for medical and surgical equipment and milk and other dairy products.

The chart below compares increases in the ACPI and the CPI since the ACPI began in June Quarter 2010.  The ACPI increased a cumulative 28.7% from June Quarter 2010 to March Quarter 2018 but over the over the same period the CPI increased by only 12.8%.  As we have observed before,  the increase in the CPI understates the true cost increases faced by ARC facility operators.

If you have any questions please contact John McDougall (

ACPI March 2018 2

[1] Notes: NZACA has standardised on the ACPI on the Quarterly Employment Survey (QES) basis, as this uses wages data specific to the Aged Care Residential Services industry.  In contrast, the Labour Cost Index (LCI) uses wages data at the level of the broader “Community and Personal Services” sector.  All ACPI figures reported here on the QES basis.  However,
the ACPI on the LCI basis can be provided on request.