1301.0 - Year Book Australia, 2006  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 20/01/2006   
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Contents >> Chapter 29 - National accounts >> Chain price indexes and implicit price deflators

CHAIN PRICE INDEXES AND IMPLICIT PRICE DEFLATORS

A by-product of the calculation of chain volume measures is the implicit price deflator (IPD). An IPD is the price index obtained when a current price estimate is divided by the corresponding chain volume measure. The ABS publishes a time series of IPDs for each of the expenditure components of GDP (excluding the changes in inventories).

Chain price indexes are also published for the major expenditure aggregates. They are the prices equivalent of chain volume estimates. Quarterly chain price indexes are generally superior to IPDs for measuring price change, because the quarter-to-quarter growth rates calculated from the IPDs reflect changes in composition of the expenditure aggregate as well as pure price change. For example, it is possible for an IPD to increase or decrease from one-quarter to another without there being any change in price. Changes in chain price indexes, on the other hand, only reflect pure price change.



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