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The chain price index for GDP recorded an average quarterly rate of growth of 0.3% from June quarter 1992 to June quarter 1998. This was followed by two quarters of small negative growth. Since the March quarter 1999, the average quarterly growth rate for the chain price index for GDP has been about 0.7%. In June quarter 2002, the chain price index for GDP increased by 0.5% on the previous quarter. The annual growth for 2001-02 from the previous year was 2.5%.
Chain price indexes are one of a suite of price indexes published by the ABS that measure price change. The consumer price index and all the producer and international trade price indexes also do this. However, the national accounts chain price indexes have one feature that the other price indexes do not share - they encompass the whole of the economy. They are annually reweighted chain Laspeyres price indexes which means that the weights used to combine their constituent, elemental price indexes are always reasonably up to date.
Chain price indexes can be thought of as a series of indexes measuring price change from a base year to quarters in the following year using current price values in each base year as weights. These indexes, which each span one year, are linked together to form a continuous time series. The time series is subsequently referenced to 100.0 in the reference year (currently 2000-01).
When calculated for the major national accounting aggregates, such as GDP or domestic final demand, chain price indexes relate to a broader range of goods and services in the economy than that represented by any of the individual consumer or producer price indexes published by the ABS. The chain price index for GDP measures the price change of all the goods and services produced in Australia, while the chain price index for domestic final demand measures the price change of the final expenditure on goods and services in Australia.
Unlike quarterly implicit price deflators (IPD), which are derived by dividing a chain volume measure into its current price equivalent, chain price indexes reflect only pure price change. In contrast, quarterly IPDs are also affected by compositional change.
Chain price indexes are used by analysts in both the public and private sector to understand the extent of inflation in the economy.