INTRODUCTION
The PBLCI is designed to measure the changes in prices of goods and services purchased by consumer households whose principal source of income is the government age pension or other government transfer payment.
The PBLCI was first published in September 2009 and was initially constructed by combining the existing Analytical Living Cost Indexes (ALCIs) for aged pensioner households and other government transfer recipient households. The publication was accompanied by an ABS Information Paper: Introduction of the Pensioner and Beneficiary Living Cost Index, Australia (cat. no. 6466.0) which provided details of the PBLCI and its relationship with the CPI and stated an intention to regularly review the index.
One such review led to the introduction of improved expenditure weights at the expenditure class level and above. These weights were estimated using data from the 2009-10 HES, which included a significantly increased sample of pensioner and other government beneficiary households. The improved expenditure weights were included at the introduction of the 16th Series Australian Consumer Price Index in September 2011(footnote 1) . More detail is contained in Analytical Living Cost Indexes and Pensioner and Beneficiary Living Cost Index: 16th Series Weighting Patterns, 2011 (cat. no. 6472.0).
While the PBLCI now has expenditure class weights more representative of the spending patterns of pensioner and other government beneficiary households, it is primarily constructed using the same expenditure class price indexes used for the CPI(footnote 2) . The assumption is that the spending patterns of pensioner and other government beneficiary households within an expenditure class are similar to those of the general CPI population, or if they are different, that they do not translate into different price movements experienced by the two at the expenditure class level.
The ABS has undertaken an extensive analysis to determine whether this assumption holds, or whether the PBLCI can be improved by applying weights that are more representative of the spending patterns of pensioner and other government beneficiary households at the level below expenditure class. This report presents the results of this analysis.
1 A number of other improvements were also implemented at the same time. The scope of the expenditure weights for pensioner and other government beneficiary households was changed from state/territory expenditures to capital city level expenditures to align with the approach used in the CPI. Also, the CPI Commodity Classification used for categorising goods and services in the PBLCI was updated. Finally, rather than being derived by combining two existing ALCIs, the PBLCI was sourced directly from CPI movements, except for mortgage interest charges, consumer credit and gross insurance charges which are not included in the CPI for conceptual reasons. It should also be noted that since the December quarter 2011 the timeliness of the PBLCI release has been improved with the PBLCI generally being released on the first Wednesday following the release of the CPI, and that since the June quarter 2012 the Pensioner and Beneficiary Living Cost Index (cat. no. 6467.0) and Analytical Living Cost Indexes for Selected Australian Household Types (cat. no. 6463.0) have been amalgamated into a single, improved product Selected Living Cost Indexes, Australia (cat. no. 6467.0). <back
2 There are some exceptions. Within ten expenditure classes, expenditure weights are already based on the spending patterns of pensioner and other government beneficiary households. <back
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