OBJECTIVES OF THE STUDY
The primary objective of the study was to determine whether pensioner and other government beneficiary households have different spending patterns below the expenditure class level, and whether any differences are likely to translate into differences in the price movements experienced by these households compared to the households represented in the main CPI.
Reference to how the ABS constructs the CPI and the PBLCI will be useful here and is presented in Figure 1 below. At the lowest level, prices of representative items are generally combined into Elementary Aggregate (EA) indexes via a simple average. EA indexes are aggregated up to expenditure class level indexes via a weighted average with weights based on household expenditure information. The expenditure class level indexes are aggregated in similar fashion up to the all-groups index on which the published headline figures are based. The group and sub-group indexes are intermediate level indexes presented to provide users with a greater level of detail.
Figure 1: Construction of the CPI and the PBLCI
Currently, the expenditure weights applied at the EA level within the PBLCI are taken from the CPI and are not derived from expenditure specific to the pensioner and other government beneficiary households. There are a few exceptions that are discussed in Appendix A: Expenditure Class Analysis
Detailed household expenditure data from the 2009-10 HES was used to compare the spending patterns of pensioner and other government beneficiary households and the CPI households within expenditure classes. Where there were statistically significant differences in spending patterns, CPI price indexes at the elementary aggregate level were used to determine whether these translated into different price movements. Detailed results of this analysis are presented in Appendix A: Expenditure Class Analysis
Further objectives of this study were to determine whether;
- additional representative items could be included in the PBLCI basket, and
- the PBLCI sub-population shop at a different selection of retail outlets from the CPI population.