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:
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:
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:
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:
Consumer Price Indexes
Australian Bureau of Statistics
Locked Bag 10
Belconnen, ACT, 2616
Phone: (02) 6252 7326
Fax: (02) 6252 7060