Producer Price Indexes, Australia

Latest release

Contains a range of producer price indexes in the Australian economy, comprising mining, manufacturing, construction and services industries.

Reference period
December 2023
Released
2/02/2024
  • Next Release 26/04/2024
    Producer Price Indexes, Australia, March 2024
  • Next Release 2/08/2024
    Producer Price Indexes, Australia, June Quarter 2024
  • Next Release 27/09/2024
    Producer Price Indexes, Australia, September 2024
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Key statistics

Final demand (excluding exports)

  • Rose 0.9% this quarter.
  • Rose 4.1% over the past twelve months.

What are the Producer Price Indexes (PPIs)?

The Australian PPIs measure the price change of products (goods and services) as they leave the place of production or as they enter the production process. This price change is measured from the perspective of the industries that produce goods and services. Whereas other measures, such as the Consumer Price Index (CPI), measure price change from the consumers perspective.

What is Final demand?

Final demand measures the price change of products (goods and services) consumed with no further processing. For example, sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn raw sugar is an intermediate product which is then used to produce the final product, refined sugar. Final demand captures final products destined for final consumption, with no further processing.

Illustrated below are two examples for the three stages: preliminary, intermediate, and final for sugar and bread.

Example of Final demand: sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn raw sugar is an intermediate product which is then used to produce the final product, refined sugar. Final Demand captures final products destined for final consumption, with no further processing.
This image illustrates two examples for the three stages: preliminary products, intermediate products, and final products: 1. Sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn raw sugar is an intermediate product which is then used to produce the final product, refined sugar. 2. Wheat is a preliminary product and used as an input into the production of flour. In turn flour is an intermediate product which is then used to produce the final product, bread.

Quarterly overview

Final demand increased 0.9% this quarter with moderate rises across most industries. Sustained growth in construction outputs is driving the rise. High crude oil and energy prices in recent quarters are still having flow on impacts to prices in other industries.

 Sep Qtr 2023 to Dec Qtr 2023Dec Qtr 2022 to Dec Qtr 2023
Final demand% change% change
Final demand (excl. exports)0.94.1

Index reference period: 2011-12 = 100.0.

The main contributors to quarterly growth in Final demand were:

  • Output of building construction (+1.9%), due to ongoing skilled labour shortages and increases in margins to mitigate against risk of resource availability over longer-term projects. 
  • Motor vehicle and motor vehicle part manufacturing (+2.4%), due to increases in import prices and increased manufacturing costs over the past year.
  • Output of heavy and civil engineering construction (+0.6%), due to ongoing skilled labour shortages and increases in operating costs of machinery. 

Rounding

Any discrepancies between totals and sums of components in this publication are due to rounding.

Construction

Input to the house construction industry

Input prices to the house construction industry rose 0.3%.

Input prices to house construction recorded a rise of 0.3% in the December quarter. Demand for later stage products used in house construction remains high, with price rises for Electrical equipment and Other materials in the December 2023 quarter reflecting the impact from limited labour supply and higher energy prices during recent quarters. 

Reduced demand for new construction resulted in suppliers discounting products used during earlier stages of construction, such as structural steel products, partially offsetting rises. Increased capacity in sea freight is also contributing to easing prices for imported materials.

Over the past twelve months, Input prices to house construction rose 2.4%.

In building materials, the main contributors were:

  • Electrical equipment (+2.2%), driven by switch and distribution boards (+4.8%), due to raw material prices, higher manufacturing costs and limited labour supply in manufacturing. 
  • Other materials (+0.5%), driven by paint and other coatings (+1.6%), due to higher manufacturing costs and recent increases in crude oil prices. 

Partially offsetting this were price falls in: 

  • Steel products (-3.7%), driven by steel beams and sections (-4.7%), due to weak demand from China and continued falls in building approvals for new houses.

Capital city price movements (Territory prices are not sampled):

  • Sydney (+0.7%), driven by Timber, board and joinery (+1.4%) due to increases in later stage product prices.
  • Adelaide (-0.2%), driven by Timber, board and joinery (-0.9%) due to decreases in structural timber prices. 
  • Perth (+0.7%), driven by Ceramic products (+5.2%) due to increased manufacturing costs. 
  • Hobart (+0.3%), driven by Cement products (+12.1%) due to increased manufacturing costs.

Input prices to house construction in Melbourne (0.0%) and Brisbane (0.0%) were unchanged in the December quarter 2023.

Output of the construction industry

Output prices of the construction industries rose.

Building construction prices rose 1.9% this quarter and 5.4% over the past twelve months.

Growth in Building construction was driven by ongoing labour shortages for skilled tradespeople, with demand placing upward pressure on output costs. Additional strength recorded in Other and Non-residential construction reflects contractors increasing margins in order to mitigate risks associated with longer term projects. While most material prices remain stable, prices increased further in the December quarter for concrete based structural components due to high demand and flow on impacts from previous energy price increases.

The quarterly price movements by class were:

  • House construction (+1.3%).
  • Other residential building construction (+2.6%).
  • Non-residential construction (+2.3%).

House construction prices rose 1.3%.

House construction prices rose this quarter, driven by increases in Western Australia, New South Wales and Victoria. Ongoing labour shortages for finishing trades and price rises for end stage materials have resulted in cost escalations which have been applied to base prices this quarter.

Over the past twelve months, House construction prices rose 4.1%.

Other residential building construction prices rose 2.6%.

Other residential construction prices increased in the December quarter 2023, driven by growth in Victoria and New South Wales. Continued labour shortages for skilled tradespeople are the primary cause for price increases this quarter. This is also reflected in increased contractor margins and ongoing project costs as medium and long-term projects account for labour supply and future demand risks. High prices for concrete based structural components due to high demand and high manufacturing costs for energy intensive products continues to place upwards pressure on the sector. Slightly offsetting the rise was a fall in Queensland, following large rises seen in September quarter 2023.

Over the past twelve months, Other residential building construction prices rose 6.3%.

Non-residential building construction prices rose 2.3%.

Non-residential construction prices increased, driven by rises in Victoria and New South Wales. Skilled labour shortages are the primary factor influencing price increases this quarter, with joinery trades, mechanical trades, electricians and tilers in high demand. Increased risk due to labour supply, labour costs and economic performance place upward pressure on project costs, with the impact of potential cost blow-outs factored into higher contractor margins and ongoing project costs.

Over the past twelve months, Non-residential building construction prices rose 6.2%.

Heavy and civil engineering construction prices rose 0.6%.

  • Other heavy and civil engineering construction (+0.5%) rose due to ongoing shortages for skilled labour and increased operating costs for machinery. 
  • Road and bridge construction (+0.9%) rose due to increased bitumen prices amid increased demand from ongoing infrastructure projects and repairs for flood damaged roads.  

Heavy and civil engineering construction prices rose 2.6% over the past twelve months.

Mining industries

Input to the coal mining industry

Input to the coal mining industry rose 2.1%.

The main contributors were:

  • Petroleum and coal product manufacturing due to a rise in diesel prices following increases in crude oil costs and reduced global supply. 
  • Rail transport due to higher fuel costs, seasonal peak demand, and supply chain blockages caused by track maintenance.

This movement was partially offset by: 

  • Electricity supply due to falls in wholesale electricity prices. 

Over the past twelve months, Input to the coal mining industry prices rose 5.3%.

Output of the mining industry

Gas extraction, domestic fell 1.3%.

Prices received for Gas extraction, domestic fell 1.3%, due to a lower amount of spot market sales to domestic buyers compared to the previous quarter. 

The quarterly price rise for Gas extraction, domestic comprised of:

  • East coast production (-3.3%).
  • West coast production (+9.5%). 

Over the past twelve months Gas extraction, domestic rose 8.6%.

East coast represents domestic gas extraction in Queensland, New South Wales, Victoria, and South Australia while West coast represents domestic gas extraction in Western Australia.

Manufacturing

Input to the manufacturing industry

Input prices to manufacturing rose 0.3%.

Input prices to manufacturing rose 0.3% over the quarter, the first quarterly rise since September quarter 2022. Input prices to manufacturing fell 2.0% over the past twelve months.

The main contributors to input price rises to the manufacturing industries were: 

  • Metal ore mining (+3.2%), due to global economic uncertainty influencing a rise in investor demand for gold. 
  • Oil and gas extraction (+3.2%), due to oil supply cuts from OPEC+ nations resulting in higher crude oil prices.
  • Coal mining (+28.6%), due to increased demand for coal used in steel production.

Offsetting the rise were price falls in: 

  • Agriculture to manufacturing (-5.0%), due to an increase in cattle and sheep supply, with higher slaughter rates prompted by a dry summer.

Output of the manufacturing industry

Output prices of the manufacturing industries rose 0.3%.

Output prices received by manufacturing industries rose 0.3% over the December quarter and 1.2% over the past twelve months.

The main contributors to output price rises of the manufacturing industries were: 

  • Basic non-ferrous metal manufacturing (+2.5%), due to a rise in investor demand for gold prompted by global economic uncertainty.
  • Bakery product manufacturing (+5.0%), due to rising input costs for energy, wheat, labour and other overheads.
  • Petroleum and coal product manufacturing (+0.8%), due to a rise in diesel prices following a rise in crude oil and constrained supply.

Offsetting the rise were price falls in:

  • Meat and meat product manufacturing (-2.0%), due to increased supply of poultry following a shortage at the beginning of 2023 as well as increased beef and lamb supply.
  • Structural metal product manufacturing (-2.1%), due to lower steel prices amongst weakened global demand.
  • Dairy product manufacturing (-2.0%), due to strong milk supply resulting in lower prices across dairy products.

Services

Output of the services industries

Accommodation and food services prices rose, driven by:

  • Accommodation services (+4.6%), driven by increased demand from cultural, arts and sporting events, as well as the spring and summer school holidays. This is the smallest December quarter rise since 2013.
  • Cafes, restaurants and takeaway food services (+0.9%), due to higher input and operating costs.

Over the past twelve months:

  • Accommodation services prices rose 0.1%.
  • Cafes, restaurants and takeaway food services prices rose 5.5%.

Transport, postal and warehousing services prices rose, driven by:

The pass through of increased fuel costs, new contract price renewals and high seasonal demand. Price rises were recorded in:

  • Road freight transport (+5.5%)
  • Rail freight transport (+5.9%)

This was partially offset by:

  • Water freight transport (-9.2%), due to competitive market conditions through increased vessel and container availability putting downward pressure on prices which continue to ease following significant increases in 2021.

Over the past twelve months:

  • Road freight transport prices rose 2.4%. 
  • Rail freight transport prices rose 6.7%. 
  • Water freight transport prices fell 31.1%. 

Rental, hiring and real estate services prices rose, driven by:

  • Non-residential property operators (+1.0%), due to rises in industrial rents as demand for warehouses and distribution centres continue to outpace supply. 
  • Other goods and equipment rental and hiring (+2.2%), driven by heavy machinery and scaffold hire linked to elevated inputs costs amid construction equipment demand across the infrastructure, mining and heavy industrial markets. 

This was partially offset by:

  • Real estate services (-1.2%), due to relatively low advertised property supply levels and heightened service competition in key markets. 
  • Passenger car rental and hiring (-6.8%), driven by reductions in household and business short term car hire rates due to weaker demand and excess fleet size capacity. 

Over the past twelve months:

  • Non-residential property operators rose 7.3%. 
  • Other goods and equipment rental and hiring rose 5.0%. 
  • Real estate services fell 5.0%. 
  • Passenger car rental and hiring fell 19.5%.

Professional, scientific, and technical services prices rose, driven by:

  • Architectural, engineering and technical services (+0.6%), due to service rate adjustments in engineering services. 
  • Computer system design and related services (+0.6%), due to increased competition placing higher pressure on labour costs. 
  • Legal and accounting services (+0.7%), due to rises in service prices by small to medium size accounting practices. 

Over the past twelve months:

  • Architectural, engineering and technical services rose 4.8%. 
  • Computer system design and related services rose 2.8%. 
  • Legal and accounting services rose 4.9%. 

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Final demand

Final Demand, index numbers and percentage changes

Construction

Input to the house construction industry

Input to the House construction industry index, weighted average of six state capital cities, index numbers and index points 

Output of the construction industry

Output of the Construction industries, subdivision and class index numbers 

Mining industries

Input to the coal mining industry

Input to the Coal mining industry, index number and percentage changes

Output of the mining industry

Manufacturing

Input to the manufacturing industry

Output of the manufacturing industry

Output of the Food manufacturing industries, subdivision, group and class index numbers

Output of the Beverage and tobacco product manufacturing industries, subdivision, group and class index numbers

Output of the Textile, leather, clothing and footwear manufacturing industries, subdivision, group and class index numbers

Output of the Wood product manufacturing industries, subdivision, group and class index numbers

Output of the Pulp, paper and converted paper product manufacturing industries, subdivision, group and class index numbers

Output of the Printing (including the reproduction of recorded media) industries, subdivision, group and class index numbers

Output of the Petroleum and coal product manufacturing industries, subdivision, group and class index numbers

Output of the Basic chemical and chemical product manufacturing industries, subdivision, group and class index numbers

Output of the Polymer product and rubber product manufacturing industries, subdivision, group and class index numbers

Output of the Non-metallic mineral product manufacturing industries, subdivision, group and class index numbers

Output of the Primary metal and metal product manufacturing industries, subdivision, group and class index numbers

Output of the Fabricated metal product manufacturing industries, subdivision, group and class index numbers

Output of the Transport equipment manufacturing industries, subdivision, group and class index numbers

Output of the Machinery and equipment manufacturing industries, subdivision, group and class index numbers

Output of the Furniture and other manufacturing industries, subdivision, group and class index numbers

Contribution to Output to the Manufacturing industries index, group index points 

Previous catalogue number

This release previously used catalogue number 6427.0.

Using price indexes

Price indexes in contracts

Price indexes published by the Australian Bureau of Statistics (ABS) provide summary measures of the movements in various categories of prices over time. They are published primarily for use in Government economic analysis. Price indexes are also often used in contracts by businesses and government to adjust payments and/or charges to take account of changes in categories of prices (Indexation Clauses).

Use of Price Indexes in Contracts sets out a range of issues that should be taken into account by parties considering including an Indexation Clause in a contract using an ABS published price index.

Changes in future issues

A review of the Final demand (excluding exports) PPI will be undertaken in March Quarter 2024. Additional selected ANZSIC groups and classes will be included in Table 5. Final demand: contribution to final demand index by industry - index points:

  • Group 301 Residential building construction
  • Group 302 Non-residential building construction
  • Class 3101 Road and bridge construction
  • Class 3109 Other heavy and civil engineering construction
  • Group 671 Property operators
  • Group 771 Public order and safety
  • Group 802 School education
  • Group 810 Tertiary education
  • Group 851 Medical services
  • Group 853 Allied health services 

The following selected ANZSIC codes will be discontinued from publication in Table 5. Final demand: contribution to final demand index by industry - index points:

  • Group 041 Fishing
  • Group 182 Basic polymer manufacturing
  • Group 212 Basic ferrous metal product manufacturing
  • Subdivision 30 Building construction (replaced with detailed Groups 301 and 302)
  • Subdivision 31 Heavy and civil engineering construction (replaced with detailed Classes 3101 and 3109)
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