6461.0 - Consumer Price Index: Concepts, Sources and Methods, 2017
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REFERENCE PERIODS

12.1 The following reference periods are discussed in Re-referencing and linking price indexes:

• Weight reference period is the period covered by the expenditure statistics used to calculate the weights. The weight reference period for the 17th series Consumer Price Index (CPI) is 2015-16.
• Price reference period is the period for which prices are used as denominators in the index calculation. The price reference period for the 17th series CPI is the September quarter 2017.
• Index reference period is the period for which the index is set to 100.0. The current index reference period is 2011-12.

RE-REFERENCING

12.2 The ABS changes the index reference period (a process known as re-referencing) of the CPI from time to time, but not frequently. This is because frequently changing the index reference period is inconvenient for users, particularly those who use the CPI for contract escalation. Also re-referencing may result in the loss of some detailed historical data, especially for long series. The current CPI index reference period was updated in the September quarter 2012 to 2011-12. Prior to this the index reference period was 1989-90.

12.3 By convention, the ABS publishes price index numbers rounded to one decimal place. Re-referencing is necessary where price index numbers fall to levels which would result in a loss of precision of period-to-period index movements. An example of a series in the CPI where this could occur is the Audio, visual and computing equipment expenditure class. This series experiences a downward trend due to the technological improvements seen in these goods, resulting in pure price falls over time. Therefore, re-referencing is required in these cases so that price indexes accurately capture period-to-period movements.

12.4 The conversion of an index series from one index reference period to another involves calculating a conversion factor using the ratio between the two series of index numbers. For example, consider converting the Clothing and footwear group index for Australia from an index reference period of 1989-90 = 100.0 to 2011-12 = 100.0 (see Table 12.1). The index number for the 2011-12 Clothing and footwear group using an index reference period of 1989-90 is (110.3 + 109.7 + 107.7 + 109.2)/4 = 109.2 (rounded to one decimal place). The published conversion factor is 0.9154 (approximately 100.0/109.2) so that the March quarter 2011 index number, on an index reference period of 2011-12 = 100.0 is 97.2 (106.2×0.9154).

12.5 Similar procedures are used to convert the 2011-12 index reference period to a 1989-90 index reference period. For example, the December quarter 2013 index for the Clothing group for Australia was 99.7 which, when multiplied by the conversion factor of 1.0920 (109.2/100.0), gives an index number of 108.9 on the index reference period of 1989-90 = 100.0. It should be noted that a different conversion factor will apply for each index and city - that is, the factor for the Clothing and footwear group for Australia will differ from the factor for the Transport group for Australia, and for the Clothing and footwear group for Sydney.

 12.1 CONVERTING INDEX REFERENCE PERIODS, CLOTHING AND FOOTWEAR GROUP Index reference period(a) Period 1980-90=100.0 2011-12=100.0 Mar qtr 2011 106.2 97.2 Jun qtr 2011 108.7 99.5 Sep qtr 2011 110.3 101.0 Dec qtr 2011 109.7 100.4 Mar qtr 2012 107.7 98.6 Jun qtr 2012 109.2 100.0 Financial year 2011-12 109.2 100.0 Sep qtr 2012 109.5 100.2 Dec qtr 2012 110.3 101.0 Mar qtr 2013 106.1 97.1 Jun qtr 2013 108.9 99.7 Sep qtr 2013 110.1 100.8 Dec qtr 2013 108.9 99.7 (a) Conversion factor: 1989-90 index reference period to 2011-12 index reference period = 0.9154.

12.6 Re-referencing does not change the relative movements between periods. Period-to-period percentage changes may differ slightly to those previously published due to rounding and the re-referencing. However, these differences do not constitute a revision.

12.7 For a full list of the conversion factors used in the most recent CPI re-reference, see table 17 in Consumer Price Index, Australia, Sep 2012 (cat. no. 6401.0).

12.8 Further information on re-referencing can be found in Appendix 1 'Re-referencing the Consumer Price Index' of Consumer Price Index, Australia, Sep 2012 (cat. no. 6401.0)