6461.0 - Consumer Price Index: Concepts, Sources and Methods, 2009

CHAPTER 1 INTRODUCTION

AIM OF THIS PUBLICATION

1.1 This publication provides a comprehensive description of price index theory and methodology, focusing on the Australian Consumer Price Index (CPI) and the concepts, sources and methods behind its compilation. It also provides some insight into the kinds of conceptual and practical difficulties that the Australian Bureau of Statistics (ABS) encounters in compiling the CPI, and how it deals with these challenges.

1.2 The ABS currently publishes a brief description of the CPI in A Guide to the Consumer Price Index, 15th Series (cat. no. 6440.0). The Guide is for those interested in a straightforward and brief account of the main features of the CPI. This Concepts, Sources and Methods publication, on the other hand, is for those users who need a deeper understanding of the CPI, and of the methods and techniques used to deal with the complex situations that arise in constructing price indexes across the spectrum of household consumer expenditure.

OTHER SOURCES OF INFORMATION ABOUT THE CONSUMER PRICE INDEX

1.3 The CPI is compiled quarterly by the ABS for quarters ending on 31 March, 30 June, 30 September, and 31 December each year. The quarterly index numbers are usually published between three and four weeks after the end of each quarter in the publication Consumer Price Index, Australia (cat. no. 6401.0).

1.4 The CPI is reviewed and re-weighted every five or six years. The last major review of the CPI resulted in the 13th series of the index which was introduced in the September quarter 1998. Several important changes were made to the index at that time. The most important of these was to change the CPI from a measure of living costs of employee households to a general measure of price inflation for households. As part of this major review, the ABS published three Information Papers:

Issues to be Considered During the 13th Series Australian Consumer Price Index Review (cat. no. 6451.0);
Outcome of the 13th Series Australian Consumer Price Index Review (cat. no. 6453 .0); and
Introduction of the 13th Series Australian Consumer Price Index (cat. no. 6454.0).

1.5 These papers describe the review process, the issues considered, the review outcomes, the re-weighting process and outline the changes from the previous series.

1.6 The 14th series of the CPI was introduced in the September quarter 2000, after a minor review completed early in 2000. The changes introduced in the 14th series were considered necessary to address issues arising from the introduction of The New Tax System (TNTS) on 1 July 2000. As part of the review process the ABS published two Information Papers describing the changes:

Price Indexes and The New Tax System (cat. no. 6425.0); and
Introduction of the 14th Series Australian Consumer Price Index (cat. no. 6456.0).

1.7 The 15th series CPI introduced in September quarter 2005 was also a minor review. The item weights were revised in line with expenditure patterns identified in the 2003-04 Household Expenditure Survey (HES), and a new sub-group called Financial services was introduced into the index. Once again, ABS published an Information Paper describing the changes:

Introduction of the 15th Series Australian Consumer Price Index (cat.no. 6462.0).

1.8 The ABS intends to update this manual periodically. Therefore, the ABS would welcome comments from the users of statistics covered in this publication. You may direct your comments or questions to:

This page last updated 16 December 2011

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About this Release Chapter 1,Introduction Chapter 2,Purpose and uses of Consumer Price Indexes Chapter 3,Historical Background Chapter 4,Price index theory Chapter 5,Coverage and classifications Chapter 6,Weights and their sources Chapter 7,Sampling Chapter 8,Price collection Chapter 9,Quality change and new products Chapter 10,Consumer Price Index calculation in practice Chapter 11,Minimising Bias in the Consumer Price Index Chapter 12,Re-referencing and linking price indexes Chapter 13,Outputs and dissemination Chapter 14,The system of price statistics	CHAPTER 1 INTRODUCTION AIM OF THIS PUBLICATION 1.1 This publication provides a comprehensive description of price index theory and methodology, focusing on the Australian Consumer Price Index (CPI) and the concepts, sources and methods behind its compilation. It also provides some insight into the kinds of conceptual and practical difficulties that the Australian Bureau of Statistics (ABS) encounters in compiling the CPI, and how it deals with these challenges. 1.2 The ABS currently publishes a brief description of the CPI in A Guide to the Consumer Price Index, 15th Series (cat. no. 6440.0). The Guide is for those interested in a straightforward and brief account of the main features of the CPI. This Concepts, Sources and Methods publication, on the other hand, is for those users who need a deeper understanding of the CPI, and of the methods and techniques used to deal with the complex situations that arise in constructing price indexes across the spectrum of household consumer expenditure. OTHER SOURCES OF INFORMATION ABOUT THE CONSUMER PRICE INDEX 1.3 The CPI is compiled quarterly by the ABS for quarters ending on 31 March, 30 June, 30 September, and 31 December each year. The quarterly index numbers are usually published between three and four weeks after the end of each quarter in the publication Consumer Price Index, Australia (cat. no. 6401.0). 1.4 The CPI is reviewed and re-weighted every five or six years. The last major review of the CPI resulted in the 13th series of the index which was introduced in the September quarter 1998. Several important changes were made to the index at that time. The most important of these was to change the CPI from a measure of living costs of employee households to a general measure of price inflation for households. As part of this major review, the ABS published three Information Papers: Issues to be Considered During the 13th Series Australian Consumer Price Index Review (cat. no. 6451.0); Outcome of the 13th Series Australian Consumer Price Index Review (cat. no. 6453 .0); and Introduction of the 13th Series Australian Consumer Price Index (cat. no. 6454.0). 1.5 These papers describe the review process, the issues considered, the review outcomes, the re-weighting process and outline the changes from the previous series. 1.6 The 14th series of the CPI was introduced in the September quarter 2000, after a minor review completed early in 2000. The changes introduced in the 14th series were considered necessary to address issues arising from the introduction of The New Tax System (TNTS) on 1 July 2000. As part of the review process the ABS published two Information Papers describing the changes: Price Indexes and The New Tax System (cat. no. 6425.0); and Introduction of the 14th Series Australian Consumer Price Index (cat. no. 6456.0). 1.7 The 15th series CPI introduced in September quarter 2005 was also a minor review. The item weights were revised in line with expenditure patterns identified in the 2003-04 Household Expenditure Survey (HES), and a new sub-group called Financial services was introduced into the index. Once again, ABS published an Information Paper describing the changes: Introduction of the 15th Series Australian Consumer Price Index (cat.no. 6462.0). 1.8 The ABS intends to update this manual periodically. Therefore, the ABS would welcome comments from the users of statistics covered in this publication. You may direct your comments or questions to: Director Consumer Price Indexes Australian Bureau of Statistics Locked Bag 10 Belconnen, ACT, 2616 Phone: (02) 6252 7326 Fax: (02) 6252 7060 E-mail: prices.statistics@abs.gov.au Document Selection These documents will be presented in a new window. This page last updated 16 December 2011

Australian Bureau of StatisticsCelebrating the International Year of Statistics 2013

Australian Bureau of Statistics
Celebrating the International Year of Statistics 2013