6401.0 - Consumer Price Index, Australia, Sep 2012
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 24/10/2012
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APPENDIX 1 RE–REFERENCING THE CONSUMER PRICE INDEX

From the September quarter 2012, the ABS harmonised the index reference periods for the Consumer Price Index (CPI) series. These series are now presented on an index reference period of 2011-12 = 100.0.

The ABS has published conversion factors in 'Table 17 - CPI conversion factors, from index reference period 1989-90 to 2011-12' available as a data cube on the 'Downloads' tab of this product. This enables users to convert previously published time series to the new index reference period or to convert index numbers on the new index reference period to an old time series index reference period.

The following examples demonstrate the method used by the ABS to calculate the conversion factors to convert from the old (1989-90 = 100.0) to the new (2011-12 = 100.0) index reference period (and vice versa).

Converting a series to the current index reference period

The conversion of index numbers from an old index reference period to a new index reference period involves a rescaling of the index numbers. The conversion factors that should be applied to the index numbers are calculated by obtaining the ratio of the index numbers on the old index reference period (1989-90 = 100.0) to the new index reference period (2011-12 = 100.0). Index numbers for financial years are calculated as the simple (arithmetic) averages of the four quarterly index numbers for that financial year.

 All groups CPI, weighted average of eight capital cities, index numbers Index reference period Period 1989-90=100.0 (old) 2011-12=100.0 (new) 2010-11 March quarter 2011 176.7 98.3 June quarter 2011 178.3 99.2 2011-12 September 2011 179.4 99.8 December quarter 2011 179.4 99.8 March quarter 2012 179.5 99.9 June quarter 2012 180.4 100.4 Financial year 2011-12 (a)179.7 (b)100.0 (a) Index number for financial year 2011-12 (index reference period 1989-90 = 100.0) = (179.4 + 179.4 + 179.5 + 180.4)/4 = 179.7 (b) Index number for financial year 2011-12 (index reference period 2011-12 = 100.0) = (99.8 + 99.8 + 99.9 + 100.4)/4 = 100.0

A conversion factor is calculated as follows:

Rounded conversion factor = 100.0/179.7 = 0.5565

Index number for the June quarter 2012 (index reference period 1989-90 = 100.0) = 180.4

Index number for the June quarter 2012 (index reference period 2011-12 = 100.0) = 180.4 x 0.5565 = 100.4

The conversion factor may be used to convert any historical All Groups CPI, weighted average of eight capital cities index numbers to the new index reference period. Different conversion factors will be required for each index series.

Converting re-referenced series back to the previous index reference period

Similarly, to convert index numbers on the new index reference period back to the old index reference period will also require rescaling of index numbers. The conversion factors that should be applied are obtained by taking the inverse of the previously described conversion factor.

Using the example above, a conversion factor is calculated as follows:

Rounded conversion factor = 179.7/100.0 = 1.7970

Index number for the June quarter 2012 (index reference period 2011-12 = 100.0) = 100.4

Index number for the June quarter 2012 (index reference period 1989-90 = 100.0) = 100.4 x 1.7970 = 180.4

The conversion factor may be used to convert any historical All Groups CPI, weighted average of eight capital cities index number to the old index reference period. Once again, different conversion factors will be required for each index series.

Conversion factors for seasonally adjusted estimates, including the weighted median and trimmed mean, are not provided. These series are subject to revision as a consequence of the ABS utilising a concurrent seasonal adjustment method whereby seasonal factors are re-estimated each quarter. The implication of these revisions is that the seasonally adjusted index numbers in the reference period (2011-12 = 100.0) will also be subject to revision which may result in a revision to the conversion factor.

Rounding

Index numbers and percentage changes are always published to one decimal place, with the percentage changes being calculated from the rounded index numbers. A consequence of re-referencing price indexes can be that period-to-period percentage changes may differ slightly to those previously published. These differences do not constitute a revision of the index series and are simply the effect of rounding and the re-referencing. There may be slight differences between user calculations and published values due to the greater level of precision of the values used in calculations performed by the ABS.

It should be noted that a different conversion factor will apply for each index series and capital city and for each analytical series. For example the conversion factor for the Clothing and footwear group for Perth will differ from the factor for the Health group for Perth and for the Clothing and footwear group for Sydney. Conversion factors for converting to the new index reference period are provided in 'Table 17 - CPI conversion factors, from index reference period 1989-90 to 2011-12'.

For further information, contact the National Information and Referral Service Hotline on 1300 135 070. The ABS provides further information on re-referencing in Consumer Price Index: Concepts, Sources and Methods, 2011 (cat. no. 6461.0) and Frequently Asked Questions available at <http://www.abs.gov.au>.