KEY CHANGES TO THE PRODUCER AND INTERNATIONAL TRADE PRICE INDEXES
2.1 Historically the Producer Price Indexes (PPIs) and International Trade Price Indexes (ITPIs) have been reviewed individually for methodological improvement or presentational purposes.
2.2 The 2011 review took a broad approach, considering the concepts, methodologies and data sources of the PPIs and ITPIs.
PRINCIPAL PURPOSE OF THE PPIs AND ITPIs
2.3 The review determined that the principal purpose of the PPIs and ITPIs is to measure inflation by industry to support the compilation of the Australian National Accounts and Balance of Payments. This requires that their compilation be on a basis coherent with the System of National Accounts 2008 (2008 SNA) and Balance of Payments and International Investment Position Manual, sixth edition (BPM6) statistical framework and on a gross industry basis, and is consistent with supporting other purposes of the PPIs and ITPIs.
THE FUTURE SUITE OF PPIs AND ITPIs
2.4 The Australian Bureau of Statistics (ABS) will continue to publish input and output indexes, as this supports the compilation of macroeconomic statistics such as the Australian National Accounts. From the September quarter 2012, the indexes will represent an industry, rather than a product (primary to an industry) view.
2.5 The Stage of production (SOP) index compilation will be retained for the PPIs and ITPIs, providing a transactional flow basis for inflation monitoring. The underlying concepts of the SOP indexes remain unchanged.
2.6 From the September quarter 2012, the ABS will re–weight the individual PPIs and SOP indexes based on the 2007–2008 Input–Output tables (I–O tables) (i.e. in respect of 2007–08). The SOP indexes will be reclassified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition (cat. no. 1292.0).
2.7 From the September quarter 2012, the ABS will provide further clarification on the concept of the SOP indexes in the Explanatory Notes of the publication Producer Price Indexes, Australia (cat. no. 6427.0) and within an updated Information Paper: Producer and International Trade Price indexes: Concepts, Sources and Methods, 2006 (cat. no. 6429.0), which will be released in early 2013. To aid in this clarification, the SOP indexes will be renamed as follows:
- Stage 3 (Final) will become Final demand – Products consumed as final demand;
- Stage 2 (Intermediate) will become Intermediate demand – Products consumed as inputs into the production of final demand; and
- Stage 1 (Preliminary) will become Preliminary demand – Products consumed as inputs into the production of intermediate demand.
For more information on the interpretation of the SOP indexes please refer to Appendix 3: Information Paper: Outcome of the Review of the Producer and International Trade Price Indexes, 2012
(cat. no. 6427.0.55.004).
2.9 From the September quarter 2014, the introduction of a new computer system is expected to allow the expansion of the coverage to include non–market price indexes for the PPIs and the inclusion of international trade in services price indexes for the ITPIs.
QUALITY IMPROVEMENT AND COHERENCE OF THE PPIs AND ITPIs
2.10 The ABS will improve the coverage of the 2008 SNA Input –Output framework by progressively developing new price indexes, in line with the priorities detailed in this review. Subsequent priorities will be decided upon by the ABS in consultation with key users.
2.11 From the September quarter 2012, the ABS will increase the collection of price observations in the third month of the reference quarter to ensure full quarter coverage. As a result:
- The ABS will delay the timing of the PPIs and ITPIs publication releases by nine working days, aligning with the Australian National Accounts and Balance of Payments input deadlines; and
- The current timing of the preliminary estimates of imports chain volume measures (CVMs) and implicit price deflators (IPDs) presented in the publication International Trade in Goods and Services, Australia (cat. no. 5368.0) cannot be supported under the revised time frames. The ABS plans to release a new electronic publication presenting the preliminary imports CVMs as soon as practicable after the release of the ITPIs. Further details of these data are published in the June quarter 2012 release of Balance of Payments and International Investment Position, Australia (cat. no. 5302.0).
From early 2013, the ABS will fully incorporate the use of the Export and Import Price Indexes (IPIs) (i.e. the ITPIs) in the compilation of the Australian National Accounts and the Balance of Payments CVMs. This outcome improves the coherence between the ITPIs and the Balance of Payments and National Accounts export and imports of goods chain price indexes and Implicit Price Deflators (IPDs). The ITPIs will continue to be aggregated using weights aligned with the International Merchandise Trade Statistics (IMTS) concepts.
From the September quarter 2014, the ABS will further improve the coherence of the ITPIs with the Balance of Payments and National Accounts export and imports chain price indexes and IPDs. The ABS will broaden the scope of the ITPIs to include International Trade in Services. The ITPIs will change to being aggregated using weights aligned with BPM6 concepts.
The ABS noted the demand for Average Unit Value (AUV) Merchandise Trade series and will continue to publish the Merchandise Trade value and quantity components which allow their derivation, in the current ABS merchandise trade publications.
From the September quarter 2014, the introduction of a new computer system is expected to allow the revision of the PPIs and ITPIs to accommodate improved data in subsequent quarters. To minimise the impact on those who use the indexes for contract indexation, once revised, indexes will be considered final (barring significant error and respondent corrections). The time period that the statistics will remain open to revision is subject to further investigation and will be announced in future issues of the Producer Price Indexes, Australia
(cat. no. 6427.0) and the International Trade Price Indexes, Australia
(cat. no. 6457.0) publications.
2.16 The ABS will continue to focus on high quality, quarterly PPIs and ITPIs, which support the compilation and analysis of macroeconomic statistics, rather than releasing these series on a monthly basis.
2.17 From the September quarter 2012, the ABS will harmonise the index reference periods for the PPIs (including the SOP indexes), ITPIs and the Consumer Price Index. These series will be presented on an index reference period of 2011–12 = 100.0.
2.18 The ABS will increase the frequency of re–weighting the PPIs in line with international recommendations to update weights at a minimum of once every five years. The ABS will undertake additional research to firm up the possibility for more frequent PPI re–weighting. The schedule of release of the Australian National Accounts I–O tables will influence this outcome. The re–weighting frequency of the ITPIs will remain annual.
2.19 From the September quarter 2012, the ABS will adopt 2008 SNA terminology when referencing indexes that align with the 2008 SNA. This will result in some changes to PPIs series titles. See Chapter 4: Terminology Changes used in the Producer and International Price Indexes.
2.20 From the September quarter 2012 the following new price index series will be published on an ANZSIC 2006 basis back to September quarter 2009 in Producer Price Indexes, Australia (cat. no. 6427.0):
SERIES CONTINUING, MINOR COMPOSITIONAL CHANGE OR NAME CHANGE
- ANZSIC 2006 Group 440 Accommodation – within the Output of the Accommodation and food services industries (Table 20) (series ID: A4406608F)
- ANZSIC 2006 Group 451 Cafes, restaurants and takeaway services – within Output of the Accommodation and food services industries (Table 20) (series ID: A4406633J)
- ANZSIC 2006 Group 697 Veterinary services– within the Output of the Professional, scientific and technical services industries (Table 24) (series ID: A4406512L)
2.21 The industry approach to be adopted from the September quarter 2012 as outlined in paragraph 2.4 means there has been some compositional shift in the majority of the published indexes in PPIs cat. no. 6427.0. The following is a summary of these changes:
- Output indexes, such as selected output of the Services industries (Tables 20–27) and Output of the Manufacturing industries (Tables 12 and 29), include all output of production for the specified industry.
- Input indexes include all inputs into production. For the Input to the Manufacturing industries series (Tables 13, 14, 15, 16 and 28) this has changed from inputs from selected products used by an industry (ANZSIC 2006 Divisions A–D), to all products used by an industry (ANZSIC 2006 Divisions A–S).
From September quarter 2012, SOP indexes (Tables 1–10) have been reclassified from an ANZSIC 1993 basis to ANZSIC 2006.
2.23 For name changes to index titles resulting from the review, see Table 4.2, Chapter 4.
2.24 The following time series will be discontinued as a result of the Review of the Producer and International Trade Price indexes. This will take effect from the September quarter 2013 release of Producer Price Indexes, Australia (cat. no. 6427.0). The series to be discontinued are:
2.25 The time series for Asphalt supplied (series ID: A2314821C) and Asphalt placed (series ID: A2314822F), presented in Table 19 of this publication will be discontinued as a result of the 2011 review from the September quarter 2013. These indexes are a component of the published time series ANZSIC 2006 Class 3101 Road and bridge construction (Table 15). The time series for ANZSIC 2006 Class 3101 Road and bridge construction is unaffected by the discontinuation of the series for Asphalt supplied and placed;
2.26 The time series for Open cut mining (series IDs: A2314310A, A2314311C and A2314312F)) and Underground mining (series IDs: A2314376T, A2314377V and A2314378W), (Table 11) will be discontinued and combined into one time series for ANZSIC 2006 Group 060 Coal mining - Input to the Coal mining industry from the September quarter 2013;
2.27 The time series for Metallic input to the Fabricated metal product manufacturing industry, presented in Table 15 of this publication, which includes time series for; Iron and steel (series ID: A2312240V), Aluminium (series ID: A2313776K), Copper and brass (series ID: A2313779T) and Zinc (series ID: A2313782F) will be discontinued from the September quarter 2013. These indexes are a component of the published time series for Input to the Fabricated metal product manufacturing industry (series ID:A2312225W), Table 15 of this publication. The time series for Input to the Fabricated metal product manufacturing industry is unaffected by the discontinuation of the series for Metallic input to the Fabricated metal product manufacturing industry; and
2.28 The time series for Copper input to the Other electrical equipment manufacturing industry, presented in Table 16 of this publication, (series IDs:A2314268J, A2314269K, A2314270V, A2314289V, A2314290C, A2314291F, A2314301X, A2314302A and A2314303C) will be discontinued from the September quarter 2013.