1.1 The Australian Producer Price Indexes (PPIs) and International Trade Price Indexes (ITPIs) produced by the Australian Bureau of Statistics (ABS) measure inflation by industry to support both the quarterly and annual Australian National Accounts and Balance of Payments calculation of chain volume measures, which form part of the System of National Accounts 2008 (2008 SNA) and Balance of Payments and International Investment Position Manual, sixth edition (BPM6) statistical framework. The indexes are also used for other purposes.
1.2 The PPIs and ITPIs are key economic indicators in most countries, including Australia. PPIs are part of the International Monetary Fund's (IMF) recommended set of economic indicators. For example, they are included in the Special Data Dissemination Standard (SDDS) expected of advanced economies.
1.3 The quarterly Australian PPIs measure the average change in the prices of products (goods and services) as they either enter or leave the production process.
1.4 The PPIs are constructed as either: input indexes, measuring the average change in the prices that producers pay for their inputs; or output indexes, measuring the average change in the prices that producers receive for their outputs. The Input indexes relate to all products used by an industry for the production of their output. The output indexes include all products produced by an industry that are sold or transferred within or outside that industry (for further processing, consumption, used as capital equipment, or exported).
1.5 Complementing the individual series, the ABS aggregates the individual PPIs and presents them in a way that gives a view of price change for the economy as a whole, by industry. These are the Stage of Production (SOP) price indexes.
1.6 The quarterly Australian ITPIs measure the average change in the prices paid for imports and the prices received for exports of merchandise.