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6427.0.55.003 - Information Paper: Review of the Producer and International Trade Price Indexes, 2011  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 02/09/2011  First Issue
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PREFACE

The Australian Bureau of Statistics (ABS) has prepared this information paper as a basis for user consultation regarding the review of the Australian Producer Price Indexes (PPIs) and International Trade Price Indexes (ITPIs).

The PPIs and ITPIs are subject to periodic reviews to ensure that they continue to meet community needs. While an important objective of the review is to update index weights and address quality issues, formal reviews provide an opportunity to reassess the scope and coverage of the indexes, changes to international best practice and other significant methodological advancements.

The ABS is undertaking a fundamental and systematic review to shape this suite of indexes for the future. This information paper discusses major issues to be considered in the review and presents ABS preliminary views. The ABS welcomes written submissions from users on the issues covered in this paper. For details on how to lodge submissions, see Consultation process.

Outcomes of the review are expected to be published in February 2012.


INTRODUCTION

PPIs and ITPIs are key economic indicators in most countries, including Australia.

The Australian PPIs measure the average price change of products each quarter as they either leave the place of production or enter the production process.

The PPIs are constructed as either output indexes, measuring the average change in the prices that producers receive for their outputs; or input indexes, measuring the average change in the prices that producers pay for their inputs. Australian output and input indexes relate to selected products that are primary to a particular industry or selected products used by production units classified to particular industries.

More broadly based indexes are produced that cover significant parts of the economy. In particular, the Stage of Production (SOP) price indexes, which in concept cover the whole of the economy, are derived from the PPIs.

The Australian ITPIs measure the average change in the prices paid for imported products landed in Australia each quarter and prices received for exports of products that are shipped from Australia each quarter.

The PPIs and ITPIs by the ABS is to support the Australian National Accounts (ANA) and Balance of Payments (BOP) calculation of volume estimates. They are also used to inform on short-term inflationary trends.


BACKGROUND

The first producer price index compiled by the ABS was the Melbourne Wholesale Price Index, which was introduced in 1912. Export price indexes have been compiled from 1901 by the ABS, while import price indexes were compiled by what is now the Reserve Bank of Australia from 1928 to 1982.

In April 1975, the Price Indexes of Materials Used in Manufacturing Industries, Australia (cat. no. 6411.0) was released. June 1976 saw the release of Price Indexes of Articles Produced by Manufacturing Industry, Australia (cat. no. 6412.0); May 1983, the release of the Import Price Index, Australia (cat. no. 6414.0); February 1989, the release of Price Indexes of Materials Used in Coal Mining, Australia (cat. no. 6415.0); September 1990, the release of the Export Price Index, Australia (cat. no. 6405.0); March 2000, the release of Producer Price Indexes for Selected Service Industries, Australia (cat. no. 6423.0); and July 2000, the release of Stage of Production Producer Price Indexes, Australia (cat. no. 6426.0).

2001 brought the next evolution of the PPIs, with the June release of Producer Price Indexes, Australia (cat. no. 6427.0) which consolidated the manufacturing, construction, mining, selected service and Stage of Production indexes into one publication. The import and export indexes were consolidated, from the June quarter of the same year, into International Trade Price Indexes, Australia (cat. no. 6457.0).


SCOPE OF REVIEW

Historically the PPIs and ITPIs have been reviewed individually for methodological improvement or presentational purposes.

Experience with the performance of these statistics during the recent global financial crisis and the outcome of the 2010 International Monetary Fund's (IMF) Report on Observance of Standards and Codes (ROSC) for Australia's macroeconomic statistics, have prompted this review to take a broad focus, considering the concepts, methodologies and data sources of the indexes.

The major issues the ABS has identified in this PPI review are:

  • Principal purpose of the PPIs and ITPIs
  • Coverage of the PPIs and ITPIs and meeting stakeholder requirements
  • The organising structure for the PPIs and ITPIs; and
  • Frequency and timing of the PPI and ITPI releases.


CONSULTATION PROCESS

The ABS is seeking the views of interested parties.

Interested parties are invited to make submissions to the ABS in relation to the issues raised in this paper, or any other issues that they consider relevant to the review. Submissions should be made to the ABS by no later than 5:00pm, on 14 October 2011.

The ABS intends to make all written submissions available to foster an informed, robust and consultative process. Please advise if you prefer your submission not to be made publicly available.

Email provision of submissions is preferred. The ABS encourages organisations and individuals to make submissions in either PDF or Microsoft Word format. Submissions should be sent by email to: ppi.review@abs.gov.au.

If required, submissions can also be sent by post addressed to:
Mr Derick Cullen
Macroeconomic Research Section, Economic Analysis and Reporting Branch
Australian Bureau of Statistics
PO Box 10
BELCONNEN ACT 2616

General inquiries may be directed to:

Mr Michael Abbondante
Macroeconomic Research Section, Economic Analysis and Reporting Branch
Australian Bureau of Statistics
+61 2 6252 7124
PO Box 10
BELCONNEN ACT 2616

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