Research over the past decade by National Statistical Offices (NSOs) and academics has identified opportunities for compiling price indexes from transactions data. As part of the program to enhance the Consumer Price Index (CPI), the Australian Bureau of Statistics (ABS) has investigated new methods, known as multilateral index number methods, to compile the Australian CPI. These new methods extend previous CPI enhancements that were implemented into the Australian CPI in 2014.
The ABS introduced CPI users to multilateral index methods to compile the CPI in the Information paper: Making Greater Use of Transactions Data to compile the Consumer Price Index (cat. no. 6401.0.60.003). This publication assessed a selection of multilateral index methods against a framework comparable to the ABS Data Quality Framework (DQF); and provided empirical results. Findings from this work demonstrated support for using a multilateral method in the Australian CPI, but did not recommend a specific method.
The international price statistics community has reached a consensus that multilateral methods are the most effective way to exploit the full amount of information provided in transactions datasets. Further, in light of additional research and external consultation with key stakeholders and international experts, the ABS is now in a position to make an informed decision about the type of multilateral index method to implement into the Australian CPI.
This information paper provides the plans for implementation of a multilateral method into the CPI. It explains the choice of method and aggregation structure, and concludes with a timeline for implementation.
Authors: Michael Holt of the ABS Consumer Price Index section; Han Q Pham and Michael Webster of the ABS Methodology Division.