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2 Capital city indexes used by the CPI are based on the 2006 Australian Standard Geographical Classification (ASGC) statistical divisions. The capital city indexes measure price movements over time in each city individually. They do not measure differences in retail price levels between cities.
3 Further information about the CPI is contained in Australian Consumer Price Index: Concepts, Sources and Methods, 2009 (cat. no. 6461.0) which is available on the ABS website <http://www.abs.gov.au>.
4 The frequency of price collection by item varies as necessary to obtain reliable price measures. Prices of some items are volatile (i.e. their prices may vary many times each quarter) and for these items frequent price observations are necessary to obtain a reliable measure of the average price for the quarter. Each month prices are collected at regular intervals for goods such as milk, bread, fresh meat and seafood, fresh fruit and vegetables, alcohol, tobacco, women's outerwear, project homes, motor vehicles, petrol and holiday travel and accommodation. For most other items, price volatility is not a problem and prices are collected once a quarter. There are a few items where prices are changed at infrequent intervals, for example education fees where prices are set once a year. In these cases, the frequency of price collection is modified accordingly.
5 In order to facilitate a more even spread of field collection workload, the number of items for which prices are collected quarterly is distributed roughly equally across each month of each quarter. In all cases, however, individual items are priced in the same month of each quarter. For example, items for which prices are collected in the first month of the September quarter, July, are also priced in the first month of subsequent quarters, namely October, January and April.
6 There are 90 expenditure classes (that is, groupings of like items) in the fifteenth series CPI and each expenditure class has its own weight, or measure of relative importance. In calculating the index, price changes for the various expenditure classes are combined using these weights.
7 Changes in the weighting pattern have been made at approximately five-yearly intervals to take account of changes in household spending patterns. The CPI now comprises fifteen series of price indexes which have been linked to form a continuous series. The current and historical weighting patterns for the CPI for the weighted average of the eight capital cities is published in Consumer Price Index: Historical Weighting Patterns (1948 to 2005) (cat. no. 6431). The 15th series weighting pattern for the weighted average of eight capital cities and for each of the eight capital cities, as well as each city's percentage contribution to the weighted average, are also published in the Consumer Price Index: 15th Series Weighting Pattern (Reissue) (cat. no. 6430.0) (electronic publication). Both publications are available on the ABS website <http://www.abs.gov.au>.
ANALYSIS OF CPI CHANGES
8 Movements in indexes from one period to another can be expressed either as changes in index points or as percentage changes. The following example illustrates the method of calculating changes in index points and percentage changes between any two periods:
All groups CPI: Weighted average of eight capital cities.
less June Quarter 2009 167.0 (see table 1)
Change in index points 5.1
Percentage change 5.1/167.0 x 100 = 3.1% (see table 2)
9 Percentage changes are calculated to illustrate three different kinds of movements in index numbers:
10 Table 7 provides a detailed analysis, for the weighted average of eight capital cities, of movements in the CPI since the previous quarter, including information on movements for groups, sub-groups and expenditure classes. It also shows the contribution which each makes to the total CPI. For instance, the dairy and related products sub-group contributed 2.17 index points to the total All groups index number of 172.1 for June Quarter 2010. The final column shows contributions to the change in All Groups index points by each group, sub-group and expenditure class.
11 Various series are presented in tables 8, 9 and 10 in this publication which are helpful for analytical purposes. These series are compiled by taking subsets of the CPI basket. (A complete list of CPI groups, sub-groups and expenditure classes is contained in tables 6 and 7.)
12 Some of the compiled series are self explanatory, such as 'All groups excluding Food'. Other series and their composition are described below:
13 Market goods and services excluding 'volatile items': in addition to the items excluded from the series 'All groups excluding 'volatile items'', also excludes: Utilities, Property rates and charges, Child care, Health, Other motoring charges, Urban transport fares, Postal, and Education. A detailed description of the special and analytical series was published in Appendix 1 to the September quarter 2005 issue of Consumer Price Index, Australia (cat. no. 6401.0).
14 The ABS is grateful for the assistance of the Reserve Bank of Australia for specifying the items included in the 'All groups excluding 'volatile items'' and 'Market goods and services excluding 'volatile items''. The Reserve Bank of Australia does not accord any special policy status to these series.
15 The CPI uses a hierarchy of rounding procedures to ensure consistency between published index numbers and percentage changes. However, rounding differences can arise in the 'points contributions' published in tables 6, 7 and 8 because of the different levels of precision required in those data.
16 In analysing price movements in Australia, an important consideration is Australia's performance relative to other countries. However, a simple comparison of All groups (or headline) CPIs is often inappropriate because of the different measurement approaches used by countries for certain products, particularly housing and financial and insurance services. To provide a better basis for international comparisons, the Seventeenth International Conference of Labour Statisticians adopted a resolution which called for countries to 'if possible, compile and provide for dissemination to the international community an index that excludes housing and financial services' in addition to the all-items index.
17 Table 11 aims to present indexes for selected countries on a basis consistent with the above resolution and comparable to the Australian series 'All groups excluding Housing and Financial services' (see paragraph 12). However, other than Australia and New Zealand, the countries represented in this table are yet to develop indexes on this basis, so the indexes presented here are consistent with the series previously published for All groups excluding Housing. To facilitate comparisons all indexes in this table have been converted, where necessary, to a quarterly basis and re-referenced to a base of 1989-90 = 100.0.
18 In producing table 11, the ABS is grateful for the assistance of the relevant national statistical agencies which have either directly supplied indexes for all items excluding housing and financial services or data to enable their derivation.
19 Current publications and other products released by the ABS are listed on the ABS website <http://www.abs.gov.au>. The ABS also issues a daily Release Advice on the website which details products to be released in the week ahead.
20 Users may also wish to refer to the following publications and other data products that are available free of charge from the ABS website:
21 As well as the statistics included in this publication, there is more detailed data for each capital city available on the ABS website. Inquiries should be made to the National Information and Referral Service on 1300 135 070.
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