6440.0 - A Guide to the Consumer Price Index: 16th Series, 2011  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 26/10/2011   
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The process of combining lower level price indexes to produce higher level indexes.

All groups
This is commonly known as the 'headline' CPI and is the highest level of the CPI, containing all the groups, sub–groups and expenditure classes.

Arithmetic mean of price relatives – refer to 4.18 for the formula.

Cost–of–living index
A measure of the change in household income required to maintain a constant level of utility.

Consumer Price Index – a general indicator of the rate of change in prices paid by households for consumer goods and services.

CPI basket
A commonly used term for the goods and services priced for the purpose of compiling the CPI.

CPI population group
The subset of the Australian population to which the CPI specifically relates. For the 16th series CPI this is all metropolitan private households.

Elementary aggregate
The lowest level of commodity classification in the CPI and the only level for which index numbers are constructed by direct reference to price data.

Expenditure aggregate
The current cost in dollars per year of purchasing the same quantity of goods or services as was purchased in the weighting base period by the CPI population group.

Expenditure class
A group of similar goods or services. The level at which weights are fixed for the life of an index series and the lowest level for which indexes are regularly published. There are 87 expenditure classes in the 16th series CPI.

Geometric mean – refer to 4.19–4.21 for the formula.

Goods and Services Tax (GST)
An ad valorem tax applied to supplies (goods and services produced or delivered) by registered suppliers engaged in taxable activity. The GST is effectively only paid by final consumers. The legislated rate of GST is 10%.

The first level of disaggregation of the CPI. There are 11 groups in the 16th series CPI.

Household Expenditure Survey (HES)
A sample survey conducted by the ABS to determine the expenditure patterns of private households. Data from the 2009–10 HES was the primary source of information for the expenditure weights for the 16th series CPI.

The periodic adjustment of a money value according to changes in a price index.

Inflation (deflation)
A term commonly used to refer to changes in price levels. A rise in prices is called inflation, while a fall is called deflation.

Link factor
A ratio used to join a new index series to an old index series to form a continuous series.

Matched sample
In a matched sample, items that are priced from period to period are identical in all respects.

For purposes of the CPI, ‘metropolitan’ refers to the six State capital cities, Darwin and Canberra.

Price index
A composite measure of the prices of items expressed relative to a defined base period.

Price levels
Actual money values in a particular period of time.

Price movements
Changes in price levels between two or more periods. Movements can be expressed in money values, as price relatives or as percentage changes.

Price relative
A measure of price movements; the ratio of the price level in one period to the price level in another.

Private households
Households living in private dwellings. Private dwellings exclude prisons, non self–care units for the aged, defence establishments, hospitals and other communal dwellings.

Quality adjustment
The elimination of the effect that changes in the quality or composition of an item have on the price of that item in order to isolate the pure price change.

Relative of arithmetic mean of prices – refer to 4.17 for the formula.

Reference base
The period in which the CPI is given a value of 100.0. The CPI is currently on a reference base of 1989–90.

The selected goods and services priced for the purpose of compiling a price index.

A technique used to introduce new items or respondents into the index calculations so that the level of the index is not affected.

A collection of related expenditure classes. There are 33 sub–groups in the 16th series CPI.

Transaction prices
The prices actually paid by consumers to acquire goods or services.

Often defined as the satisfaction derived from consumption of a good or service.

The measure of the relative importance of an item in the index regimen. Weights can be expressed in either quantity or value terms. Value weights are used in the CPI.

Weighting base period
The period to which the fixed quantity weights relate. The weighting base period for the 16th series CPI is 2009–10.