6470.0.55.002 - Information Paper: Introduction of the Consumer Price Index Weight Update, 2018  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 12/12/2018  First Issue
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BACKGROUND

1.1 The ABS first compiled the CPI in 1960 with the series extended back to 1948. Prior to introducing the CPI, from 1901 to 1960, the ABS produced a number of discrete retail price indexes, each constructed with fixed quantity weights, spanning different lengths of time – for more detail see chapter 3 of Consumer Price Index: Concepts, Sources and Methods.

1.2 The introduction of the CPI heralded a different approach to constructing price indexes. Rather than compiling a set of discrete fixed-weighted indexes, the objective became to produce a series of short-term fixed-weighted indexes that were to be regularly linked (or chained) together to provide a single continuous measure of price change. This strategy was adopted to ensure that, at any point in time, the weighting patterns and item coverage of the CPI were relevant to user requirements and reflected contemporary economic conditions as accurately as possible. As a result, the ABS has maintained a program of periodic reviews of the CPI to ensure that it continues to meet community needs.

1.3 Traditionally, these reviews have coincided with the release of the ABS’s Household Expenditure Survey (HES), which is currently conducted every six years. In recent years, the ABS has undertaken a program to enhance the CPI (ABS, 2015). Part of this program included the use of alternative data sources to more frequently update the CPI weights. Following investigations in 2016, the CPI will be re-weighted annually using the methods outlined in the information paper Increasing the Frequency of CPI Expenditure Class Weight Updates.

1.4 This latest information paper summaries the data sources and methods to annually re-weight the CPI and SLCIs; and presents the 2018 weights.

1.5 The updated weights will be implemented in the December quarter 2018 publications of the CPI and SLCIs, to be released on 30 January 2019 and 6 February 2019 respectively.