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6427.0 - Producer Price Indexes, Australia, Dec 2010  
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EXPLANATORY NOTES


INTRODUCTION

1 This publication and associated data cubes and time series spreadsheets available on the ABS website <http://www.abs.gov.au>, contain a range of producer price indexes. Economy-wide indexes are presented within a stage of production framework in this publication. A set of other indexes relating to products or services that are primary to specific industries (selected manufacturing, construction, mining and service industries) are available on the ABS website <http://www.abs.gov.au>.

2 Index numbers for the stage of production producer price indexes, services and construction indexes, are primarily calculated on the reference base 1998-99=100.0. The index numbers for other producer price indexes are primarily calculated on the reference base 1989-90=100.0. New manufacturing and services indexes, introduced as part of the ANZSIC 2006 implementation in the September quarter 2009, are calculated on the reference base 2001-02 = 100.0. (Further information relating to the reference bases is presented in the Appendix to the March quarter 2009 issue of this publication).


GENERAL

Industry versus product

3 Producer price indexes relate to products that are primary to a particular industry, irrespective of the industrial classification of establishments undertaking the activity. The indexes do not represent the activity of establishments classified to a particular industry. For ease of use, some of the tables relating to producer price indexes carry the title 'Selected output of an ANZSIC Division or Subdivision'. This indicates selected output of products primary to that ANZSIC Division or Subdivision. The labels for the tables available on the ABS website <http://www.abs.gov.au> associated with these additional publications have been shortened. The coverage of these tables is as described in these explanatory notes.


Output and input indexes

4 Producer price indexes can be constructed as either output or input measures. The output producer price indexes relate to selected products that are primary to a particular industry, irrespective of the industrial classification of establishments undertaking the activity. The input producer price indexes relate to selected products used by establishments classified to particular industries.


Valuation basis

5 The valuation basis for the transactions covered by an output index is basic prices, defined as the amount received by the producer exclusive of any taxes on products and transport and trade margins (i.e. the pricing point is ex-factory, ex-farm, ex-service provider, etc.).

6 On the other hand, an input index has a valuation basis of purchasers' prices, defined as the amount paid by the purchaser inclusive of any non-deductible taxes on products and transport and trade margins (i.e. the prices recorded in the index should be those relating to products delivered into store, delivered on site, etc.).

7 In reality, industry practice may mean that it is sometimes necessary to diverge from the conceptual ideal in order to obtain actual transaction prices. For example, although the pricing point for the output index Price Indexes of Articles Produced by Manufacturing Industries is ex-factory, in cases where costs such as handling and distribution are built into the manufacturer's selling price, they will be included in the index.

8 Similarly, for input indexes such as the Price Index of Materials Used In House Building, which has a pricing point of delivered on site, it has sometimes been necessary to use the nearest actual transaction price available, e.g. prices of materials supplied and fixed.

9 The GST is excluded from all the prices recorded in the current producer price indexes because, in the main, it is deductible on business-to-business transactions. In the case of service industry output indexes relating to business-to-household transactions, the GST is also excluded because the pricing basis is basic prices (i.e. exclusive of product taxes).


Items and weights

10 The indexes are fixed weighted indexes of the Laspeyres form. The list of items and the weights are updated periodically to ensure they remain representative. New index series compiled using updated weights are linked to the previous series to maintain a continuous series. Broad level weights are derived from an analysis of the latest available input-output tables as well as other ABS and industry sources.

11 Where prices of items are expected to move in a similar way, many of the directly priced items carry not only their own weight but also the weight of similar commodities.


Price measurement

12 The main sources of ongoing price data are samples of businesses. The samples can relate to either buyers or sellers, or a combination of both. The choice is influenced by the pricing point of the index (output or input) and practical considerations such as the relative degree of concentration of buyers, and of sellers, and the implications for sample sizes and costs.

13 The main pricing methodology used is specification pricing, under which a manageable sample of precisely specified products is selected, in consultation with each reporting business, for repeat pricing. In specifying the products, care is taken to ensure that they are fully defined in terms of all the characteristics which influence their transaction prices. As such, all the relevant technical characteristics need to be described (e.g. make, model, features) along with the unit of sale, type of packaging, conditions of sale (e.g. delivered, payment within 30 days), etc.

14 When the quality or the specifications of an item being priced change over time, adjustments are made to the reported prices so that the index captures only pure price change. That is, any element of price change attributable to a change in quality is removed. If there is an increase (decrease) in the quality of an item, the price is adjusted downwards (upwards) to reflect the value of the quality change to the provider of the goods or services. This technique is known as pricing to constant quality.

15 Another very important consideration in establishing and maintaining price collections is to ensure that the prices reported are actual market transaction prices. That is, they must reflect the net prices received (or paid) after taking into account all discounts applied to the transactions whether they be volume discounts, settlement discounts or competitive price cutting discounts which are likely to fluctuate with market conditions.

16 Any rebates also need to be considered. The collection of nominal list prices, or book prices, is unlikely to yield reliable price indexes and could result in quite misleading results if fluctuations in transaction prices are not captured. The ABS therefore asks respondent businesses to report details of the discounts they offer so that actual transaction prices can be calculated. In addition, as many different types of discounts apply to business-to-business transactions (see paragraph 15), considerable effort is put into monitoring discount practices in order to identify changes to existing discounts and the introduction of new ones.

17 Specification pricing is not feasible in cases where the products are unique and not reproduced over time, e.g. construction industry output and many of the customised business services. As a result, alternative pricing techniques need to be used, often involving compromise. Some of the approaches adopted include the use of model pricing, collecting unit values for reasonably homogeneous components of a good or service, input pricing and collecting charge-out rates (e.g. for a legal service).


Classifications

18 As far as possible, the industry indexes have been constructed in accordance with the Australian and New Zealand Standard Industrial Classification ANZSIC 2006 (cat. no. 1292.0). Prior to September quarter 2009, all of the series were based on the ANZSIC 1993 classification. The stage of production series (tables 5-9 and 24-25) remain on an ANZSIC 1993 basis. However, from the September quarter 2009 onwards, the other producer price indexes relating to products primary to specific industries are based on ANZSIC 2006. A mapping has been prepared to enable the ANZSIC 2006 producer price indexes to be represented under the ANZSIC 1993 stage of production framework. Further information on the new industrial classification can be found in the Appendix to the March quarter 2009 issue of this publication, as well as in Information Paper: Update on ANZSIC 2006 Implementation for Producer and International Trade Price Indexes, Australia, 2009 (cat. no. 6427.0.55.002).


STAGE OF PRODUCTION (SOP) PRODUCER PRICE INDEXES

Introduction

19 Tables 1-9 and 24-25 present producer price indexes for the supply of commodities to the Australian economy in a stage of production (SOP) framework. As such, the indexes cover both domestically produced and imported commodities, individually and in aggregate. The SOP indexes are compiled from data used in the industry sector indexes, the international trade indexes and some additional data collections. The indexes are calculated on the reference base 1998-99=100.0.

20 These indexes are compiled within the statistical framework outlined in Information Paper: An Analytical Framework for Price Indexes in Australia, 1997 (cat. no. 6421.0) and are designed to support the study of inflation.

21 A more detailed explanation of the SOP concept is contained in Information Paper: Producer Price Index Developments, 1999 (cat. no. 6422.0). The index numbers in this current publication cannot be directly compared with the experimental index numbers in the information paper because:

  • the coverage of the series has been expanded to include selected service and construction industries; and
  • the weighting patterns of the indexes have been updated to 1996-97 and the reference base of the indexes has been updated to 1998-99=100.0.


Pricing basis

22 In concept the valuation basis of the SOP indexes is basic prices (see paragraphs 5-9). However, the use of component series from existing ABS price collections in some cases results in the pricing basis diverging from this ideal. For example, imports are priced on a 'free-on-board' (f.o.b) basis, not 'cost, insurance, freight' (c.i.f), which approximates basic prices.


The SOP concept

23 The indexes are compiled using the SOP concept. Under this concept flows of commodities are categorised according to their economic destination on a sequential basis along the production chain. The basis for the categorisation is the Australian input-output tables (1996-97). The primary categorisation is between final commodities (i.e. commodities destined for final consumption, capital formation or export) and non-final commodities (i.e. commodities that flow into intermediate consumption for further processing).

24 This initial breakdown of the commodity flows into final and non-final represents a useful economic dissection of producers' transactions. However, the non-final commodities can flow into the production of both final and other non-final commodities. Therefore, to aid analysis, the non-final commodity flows have been divided on a sequential basis between Stage 1 (or preliminary) commodities and Stage 2 (or intermediate) commodities as illustrated below. This approach results in three separate stages of production.

Diagram: SOP concept diagram showing production flow through Stages

25 The three stages are not aggregated in order to avoid the potential distorting effects that may result from multiple counting of changes in transaction prices as commodities flow through different production processes.

26 Under this framework, preliminary (Stage 1) commodities are used in the production of intermediate (Stage 2) commodities; in turn intermediate (Stage 2) commodities flow into the production of final (Stage 3) commodities.

27 The framework allows for analyses of price change as commodities flow through production processes. Price changes for earlier stages of production may be indicators of possible future price changes for later stages.


Transaction flow approach

28 The ABS has adopted a transaction flow approach in disaggregating commodity supply into the various production stages. This approach means that the assignment of a commodity to a stage is based on the proximity of its use in final demand.

29 Alternative degree of fabrication or principal destination approaches are employed by statistical agencies in some other countries. These approaches result in the allocation of particular commodities to one, and only one, stage. This would present particular problems for Australia due to the openness of the economy, with exports (and imports) equivalent to about 20% of gross domestic product. Commodities such as wheat, wool, and iron ore are exported in large volumes as well as being further processed locally. The allocation of such commodities to a single stage would be very arbitrary by necessity.

30 Adopting the transaction flow approach means, for example, that exported wheat and domestically used wheat are treated as different commodities for index construction purposes. Under this approach commodities transactions can be allocated to more than one stage. Exported wheat is treated as a final (Stage 3) commodity while wheat used domestically to make the flour used in bread production is considered to be a preliminary (Stage 1) commodity. Similarly, commodities such as energy and containers appear under all three categories.


Scope and coverage

31 Producer price indexes conventionally relate to the output primary to domestic industries, at basic prices, either inclusive or exclusive of exports. As the main focus is on domestic inflation, exports are excluded from the headline SOP series 'Final (Stage 3) commodities', as presented in the key figures on the front page and in tables 1-6. Index series for Final (Stage 3) commodities including exports are available in tables 24 and 25.

32 Imports have also been incorporated within the framework, recognising that they represent an important potential source of inflationary pressure.

33 In concept, the SOP indexes incorporate all flows of goods and services. However, currently there is limited coverage of service industries and the construction industry by the producer price indexes (see sections on construction industry and service industries producer price indexes below).

34 Price indexes for most Transport and storage services (Division I of ANZSIC 1993) and Property and business services (Division L of ANZSIC 1993) industries have been included in the SOP framework. However, price series for most Final (Stage 3) consumer services are not currently available on a sufficiently timely basis to allow their inclusion in the indexes. This has the effect of decreasing the relative weight of consumer items versus capital items in the final stage. It is intended to introduce additional services price series as they become available, along with the consequential weight changes.

35 Index coverage for the construction industry (Division E of ANZSIC 1993) is currently limited to the outputs primary to the following ANZSIC 1993 classes:
  • 4111 House construction;
  • 4112 Residential building construction n.e.c.;
  • 4113 Non-residential building construction; and
  • 4121 Road and bridge construction.

36 As with services, it is intended to introduce further construction price series as they become available.


Items and weights

37 The items included in the indexes reflect the values of commodity flows, for both domestic supply and imports, allocated to stages based on an analysis of detailed 1996-97 input-output tables. The index structures and weighting patterns for the SOP indexes are shown in the Appendix of the December quarter 2002 issue of this publication.


Comparisons with the Consumer Price Index

38 Final (Stage 3) indexes are presented for consumer commodities. It should be noted that this index is not directly comparable with the Consumer Price Index (CPI). The two indexes differ significantly in concept and coverage. The major differences are:
  • the pricing basis for the Final (Stage 3) SOP consumer index is basic prices (see paragraph 22). The CPI, however, measures changes in purchasers' prices, i.e. the actual retail prices paid by households for products, inclusive of non-deductible taxes on products, such as the GST, and any transport and trade margins;
  • the coverage of the two indexes differs. Currently the Final (Stage 3) SOP consumer index mainly measures changes in the prices of goods, i.e. most household services are currently excluded from the index (see paragraph 34). The CPI covers both goods and services; and
  • the indexes have different weighting bases. The weighting pattern for the Final (Stage 3) SOP consumer index is based on the 1996-97 input-output tables, while the CPI weighting pattern is based on the 2003-04 Household Expenditure Survey.


MANUFACTURING INDUSTRY PRODUCER PRICE INDEXES

Introduction

39 The manufacturing output producer price indexes relate to selected products (i.e. articles produced) primary to the manufacturing industry, while the manufacturing input producer price indexes relate to materials used by establishments classified to the manufacturing industry. They are important sources of data for the SOP indexes.

40 The manufacturing industry series are available on the ABS website <http://www.abs.gov.au>. Tables 10 and 11 present the Price Indexes of Articles Produced by Manufacturing Industries and tables 12-14 present the Price Indexes of Materials Used in Manufacturing Industries. Basic prices are used for the output index and purchasers' prices for the input index (see paragraphs 5-9). Therefore, as far as possible, ex-factory prices are included in the output index. Delivered into factory prices are included in the input index.

41 Table 30 presents Price Indexes of Copper Materials used in the manufacture of electrical equipment.

42 The reference base for all of the ANZSIC 2006 classified manufacturing output and input indexes linked to previous ANZSIC 1993 classified indexes is 1989-90 = 100.0. The reference base for new manufacturing output and input indexes, introduced as part of the ANZSIC 2006 implementation in the September quarter 2009, is 2001-02 = 100.0. (Further information relating to the reference bases is presented in the Appendix to the March quarter 2009 issue of this publication).


Scope

43 Prior to the September quarter 2009, the manufacturing indexes were constructed on a net sector basis with intra-sector transactions netted out. The scope of the output indexes was therefore restricted to transactions in produced articles primary to the defined sector of the Australian manufacturing industry that were sold or transferred to domestic establishments outside that sector, or used as capital equipment, or exported. The scope of the input indexes related to transactions in materials used in defined sectors of the Australian manufacturing industry that were produced by domestic establishments outside that sector, or imported.

44 From the September quarter 2009, the manufacturing indexes are constructed on a gross sector basis. The scope of the output indexes includes transactions in produced articles primary to the defined sector of Australian manufacturing industries that are sold or transferred to domestic establishments within or outside that sector for further processing, or used as capital equipment, or exported. Articles are defined as all products primary to the manufacturing industry excluding commission production products and general government consumption of fixed capital. The scope of the input indexes relates to transactions in materials used by establishments classified to the manufacturing industry. Materials are defined as products primary to ANZSIC 2006 Divisions A - D (ie agriculture, forestry, fishing, mining, manufacturing and electricity, gas, water and waste services) that are consumed by establishments classified to the manufacturing industry.

45 An advantage of the net sector approach over the gross sector approach was that it avoided the potential distorting effects that may have resulted from multiple counting of changes in transaction prices as commodities flow through different production processes. However, although conceptually valid, the exclusion of the internal intermediate transactions from the net sector manufacturing division indexes resulted in incomplete coverage of the targeted sector of the economy. Prior to the September quarter 2009, in order to increase coverage, while still avoiding the multiple counting issue, independent net sector measures were constructed for articles primary to manufacturing subdivisions and groups on an ANZSIC 1993 basis. While having intermediate transactions between different manufacturers within a given subdivision or group netted out, intermediate transactions with manufacturers in other subdivisions/groups were in-scope.

46 Following further analysis and discussions with key users of the indexes, the ABS has determined that the potential for distortion from multiple counting of changes in transaction prices is low. An advantage of the gross sector approach is improved coverage of transactions primary to the targeted sector of the economy. Intermediate transactions between manufacturers in other ANZSIC subdivisions or groups and transactions between different manufacturers within the same ANZSIC subdivision or group are in-scope. The change in concept from net to gross sector is not expected to have a material impact, as the same influences affect prices whether transactions occur within or outside the manufacturing industry.

47 The gross sector approach is more appropriate for use alongside the SOP framework. Conceptually, the SOP indexes are economy-wide relating to transactions primary to all the goods and services industries, and the gross sector approach is more consistent with the system of national accounts.


Classification

48 The manufacturing division output index (table 10), from the September quarter 2009 onwards, measures changes in prices of articles that are primary to ANZSIC 2006 Division C - Manufacturing, that are sold or transferred to domestic establishments within or outside the manufacturing division for further processing, intermediate use or used as capital equipment or exported. Prior to the September quarter 2009 this index was constructed on a net sector basis (see paragraphs 43-47 above).

49 Similarly, the output indexes for articles primary to manufacturing subdivisions and groups (table 11) measure transactions within and outside the subdivision or group. Prior to September quarter 2009 these series were constructed on a net sector basis. They excluded intermediate transactions in produced articles primary to the specific manufacturing subdivision or group that were sold or transferred within that subdivision or group for further processing.

50 The manufacturing division input index (tables 12 and 13), from the September quarter 2009 onwards, measures changes in prices of materials used in ANZSIC 2006 Division C - Manufacturing, that have been purchased or transferred in from domestic establishments within or outside the manufacturing division, or imported. Prior to the September quarter 2009 this index was constructed on a net sector basis (see paragraphs 43-47 above).

51 Similarly, the input indexes for materials used in manufacturing subdivisions and groups (table 14) measure input purchases or transfers within and outside the subdivision or group. Prior to September quarter 2009 were constructed on a net sector basis. They excluded intermediate transactions in materials used in a specific manufacturing subdivision or group that were sold or transferred within that subdivision or group for further processing.


Items and weights

52 From the September quarter 2009, the items included in the manufacturing indexes reflect the values of articles produced and materials used based on an analysis of detailed 2001-02 input-output tables.

53 The index structures and weighting patterns for the manufacturing input and output division indexes are shown in Appendix 1 of Information Paper: Update on ANZSIC 2006 Implementation for Producer and International Trade Price Indexes, Australia, 2009 (cat. no. 6427.0.55.002). Index structures and weighting patterns for the associated ANZSIC subdivisions and groups are available from the ABS website <http://www.abs.gov.au> as data cubes in that information paper (cat. no. 6427.0.55.002).


CONSTRUCTION INDUSTRY PRODUCER PRICE INDEXES

Introduction

54 The construction producer price indexes relate to outputs primary to ANZSIC 2006 Division E. The House building (i.e. material used) input index relates to products used by establishments classified to ANZSIC 2006 Division E. These indexes are important sources of data for the SOP index.

55 The construction industry series are available on the ABS website <http://www.abs.gov.au>. Table 15 presents the Price index of the outputs that are primary to the building construction subdivision and selected construction industry classes. Tables 16 and 17 present the price index of Materials used in house building. The pricing basis is basic prices for the output indexes and purchasers' prices for the input index (see paragraphs 5-9 above). Therefore, as far as possible, builders' selling prices are reflected in the output index, and delivered on site prices are reflected in the input index.

56 Table 31 presents the price indexes for Asphalt supply and Asphalt placed for the weighted average of six capital cities. These indexes measure changes in the price of the supply, delivery and placement of selected grades of asphaltic concrete used in road construction in capital city statistical divisions. As far as possible, actual transaction prices are used in this index.

57 The output indexes are calculated on the reference base 1998-99=100.0 and the input indexes on the reference base 1989-90=100.0.


Scope

58 The construction outputs price indexes (table 15) measure changes in prices of the outputs primary to selected construction industry classes. Presented in this table is the ANZSIC 2006 Subdivision (30) - Building construction which consists of three classes: House construction (3011); Other residential building construction (3019); and Non-residential building construction (3020). Outputs primary to the class Road and bridge construction (3101) are also presented in this table.

59 The construction input indexes (tables 16 and 17) measure changes in prices of Materials used in house building, where a house is defined as a detached building predominantly used for long-term residential purposes and consisting of only one dwelling unit. ANZSIC class House construction (3011) approximates the industry scope of the index.

60 The input index does not explicitly cover alterations, additions, renovations and repairs. It relates to the statistical division for each State capital city.


Items and weights

61 ANZSIC class output indexes at the national level are aggregated to the relevant group and subdivision using weights derived primarily from values of the supply of new general construction products in Australia as measured in input-output statistics. ANZSIC class indexes at the State and Territory level are aggregated to the national level using proportions based on the value of work done by State and Territory and type of construction as measured by ABS building and construction activity statistics. From December quarter 2007 index numbers have been calculated using an updated weighting pattern in which input-output values for 2001-02 have replaced 1996-97 values and new State and Territory activity proportions have been derived from the two calendar years 2005 and 2006 to replace previous proportions derived from a 5 year average of the years 1994-95 to 1998-99. The indexes generally use prices for work undertaken in each capital city, as construction activity in the city is taken to represent the whole State or Territory. For Queensland, however, other residential building construction and non-residential building construction also use prices obtained for North Queensland.

62 The items and weights for the price index of Materials used in house building were derived from reported quantities of each material used in selected representative houses in the three years ending 2002-03. The weighting pattern for each capital city index will reflect variations in prices for the cities as applied to an Australian average basket of house building materials, with some allowance for city specific building practices e.g. the differential use of steel and timber materials in Perth and Adelaide compared with the other capital cities. The weighting patterns for the price index of Materials used in house building are set out in Appendix 2 of the September quarter 2005 issue of this publication. Note that the weights shown are values based on the quantities of various materials used in house building over the 3 years ended 2002-03, valued at September quarter 2005 prices.


MINING INDUSTRY PRODUCER PRICE INDEXES

63 The mining industry series are available on the ABS website <http://www.abs.gov.au>. Table 18 presents Price Indexes of Materials used in coal mining. The pricing basis of the index is purchasers' prices (see paragraphs 5-9) and, as far as possible, the prices included in the index are for items delivered to the mine site or to the primary storage area for a group of mines.

64 The items included in the indexes reflect the value of materials used in the operation of open cut and underground coal mines in Australia during 1999-2000. The index structures and weighting patterns are available on request.

65 The indexes are calculated on the reference base 1989-90=100.0.


SERVICE INDUSTRIES PRODUCER PRICE INDEXES

Introduction

66 The service industry series are available on the ABS website <http://www.abs.gov.au>. Tables 19-23 present index numbers for selected services primary to the following ANZSIC 2006 divisions; Division I - Transport, postal and warehousing; Division J - Information media and telecommunications; Division L - Rental, hiring and real estate services; Division M - Professional, scientific and technical services; Division N - Administrative and support services; Division O - Public administration and safety and Division S - Other services. The pricing basis of each index is basic prices (see paragraphs 5-9). Prices used in the index relate to the amount received by the service provider. These indexes are important sources of data for the SOP indexes. The original index numbers are calculated on the reference base 1998-99=100.0. New indexes created as part of the implementation of ANZSIC 2006 in the September quarter 2009 have been backcast to September 2001. These index numbers are calculated on the reference base 2001-02=100.0.

67 The currently available service industry indexes represent the results to date of a program to progressively extend the scope of the producer price indexes into the service sectors of the economy. First results from the program were published in March 1999, by way of experimental indexes, in Information Paper: Producer Price Index Developments 1999 (cat. no. 6422.0). Similarly, changes to the indexes published from September quarter 2009 on the ANZSIC 2006 basis have been documented in Information Paper: Update on ANZSIC 2006 Implementation for Producer and International Trade Price Indexes, Australia, 2009 (cat. no. 6427.0.55.002).


Scope

68 The service industry series measure changes in prices of services primarily defined to selected ANZSIC 2006 industries, excluding general government consumption of fixed capital. Selected output for these industries is provided in tables 19-23. Note that some ANZSIC classes do not yet have established indexes, and thus are not represented within these tables.


Items and weights

69 From September quarter 2009, ANZSIC 2006 class indexes are aggregated to the relevant group, subdivision and division using weights derived from 2001-02 input-output domestic production values, in combination with data from other ABS surveys and industry sources. Prior to this weights for these series on an ANZSIC 1993 basis were derived from 1996-97 input-output values.


Price measurement

70 The development of the services price collections has involved a wide range of diverse industries with different measurement problems. Accordingly, extensive consultation with industry associations and individual businesses has been undertaken to determine the most viable approach, on a case-by-case basis.

71 Characteristics found within the services sector of the economy have complicated the task of price measurement.

72 The tendency within many industries to provide unique, one-off services tailored to the needs of individual customers has posed difficulties in establishing continuity of pricing to constant quality.

73 The 'bundling' of a range of different component services within the one transaction or contract has required investigation of the feasibility of 'unbundling', that is, obtaining separate prices for each of the components of the total service. Where this has not proven to be feasible, the whole service bundle has been priced in total.

74 Respondent businesses are asked to report details of any discounts they offer so that actual transactions prices can be calculated. However, as discounts are sometimes negotiated between individual buyers and sellers in relation to particular transactions, identifying discounts has not always been straightforward.

75 The deregulation of some service industries leads to structural changes and more complex pricing practices. To deal with this, samples are continually updated to incorporate new businesses and pricing methodologies are reviewed over time.


Future developments

76 It is planned to make available indexes for the majority of remaining ANZSIC 2006 classes within the services divisions after they have been developed from experimental to production status. At such time these new indexes would contribute to the broader SOP indexes in this publication and associated outputs available on the ABS website <http://www.abs.gov.au>.


INDEX NUMBERS

77 Index numbers for financial years are simple averages of the relevant quarterly index numbers.

78 Indexes for the price index of Materials used in house building are presented separately for each of the six State capital cities. These city indexes measure price movements over time for each city. They do not measure differences in price levels between cities.


ANALYSIS OF INDEX CHANGES

79 Care should be exercised when interpreting quarter-to-quarter movements in the indexes as short-term movements do not necessarily indicate changes in trend.

80 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 index points changes and percentage changes between any two periods:
Stage of Production: Total Final commodities index numbers
June quarter 2010 135.2 (see table 1)
less June quarter 2009 133.9 (see table 1)
Change in index points 1.3
Percentage change 1.3/133.9 x 100 = 1.0% (see table 2)

81 Tables 5, 6 and 7 provide analyses of the index points contribution which ANZSIC groups make to the stage of production final commodities indexes, in total, and then separately for domestic and imported commodities. For example, in table 5 petroleum refining contributed 3.48 index points to the Total Final commodities index number of 135.2 for June quarter 2010 and 0.06 index points to the net change of 0.4 index points between March quarter 2010 and June quarter 2010.

82 Tables 8 and 9 analyse the contributions to the intermediate and preliminary commodities index numbers, respectively.


FURTHER INFORMATION

83 Further information on recent price index developments in the ABS is presented in the following publications:
      Information Paper: Producer and International Trade Price Indexes; Concepts, Sources and Methods, 2006, (cat. no. 6429.0)
      Information Paper: An Analytical Framework for Price Indexes in Australia, 1997, (cat. no. 6421.0)
      Information Paper: Producer Price Index Developments, 1999, (cat. no. 6422.0)
      Information Paper: Review of the Import Price Index and Export Price Index, Australia, 1999, (cat. no. 6424.0)
      Information Paper: Price Indexes and The New Tax System, 2000, (cat. no. 6425.0)
      Information Paper: The Introduction of Hedonics Price Indexes for Personal Computers, 2005, (cat. no. 6458.0)
      Information Paper: Changes to the Weights of the Price Indexes for the Output of the General Construction Industry, Australia, 2008, (cat. no. 6406.0)
      Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006, (Revision 1.0), (cat. no. 1292.0)
      Information Paper: Update on ANZSIC 2006 Implementation, Australia, 2008, (cat. no. 1295.0.55.001)
      Information Paper: Update on ANZSIC 2006 Implementation for Producer and International Trade Price Indexes, Australia, 2009, (cat. no. 6427.0.55.002)


RELATED PUBLICATIONS

84 Users may also wish to refer to the following related publications, which are available from ABS bookshops:
      International Trade Price Indexes, Australia, (cat. no. 6457.0)
      Consumer Price Index, Australia, (cat. no. 6401.0)
      Labour Price Index, Australia, (cat. no. 6345.0)
      Australian National Accounts, input/output Tables, (cat. no. 5209.0)
      Balance of Payments and International Investment Position, Australia, (cat. no. 5302.0)

85 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.


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