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QUALITY DECLARATION – SUMMARY
The Producer Price Indexes are used by the government and private sector for a variety of purposes:
Producer Price Indexes are released each quarter (three months ending March, June, September and December). The data are released no later than 33 days after the end of the reference quarter, apart from the index of the output of the Retail Trade industry (which is released no later than 58 days after the end of the quarter).
The Producer Price Indexes measure price changes, over time, in selected industries of the Australian economy. Transactions for each of these industries may cover purchase and sales of thousands of different products at a wide variety of prices. The sheer volume and complexity of these transactions mean that a non–probability sampling method is more practicable and efficient than probability sampling methods. A non–probability sampling method involves choosing producers based on the relative importance of the products they sell or buy, who they sell to or buy from and the nature of their pricing policies.
There are two principal sources of error in surveys: sampling error and non–sampling error. Non–sampling error arises from inaccuracies in collecting, recording and processing the data. Every effort has been made to reduce non–sampling error in the PPI, by:
Sampling error occurs when a sample or subset of the population is surveyed rather than the entire population. One measure of the likely difference resulting from not including all of the population in the survey is given by the standard error. While the selection of producer transactions are based on sampling techniques, standard errors are not available for the PPI. While it is reasonably straightforward to calculate sampling errors for a level estimate, it is not so straightforward to determine standard errors for the PPI which uses both sampling and index methodologies.
The main sources of ongoing price data are samples of businesses. The samples can relate to either buyers or sellers, or a combination of both. The choice is influenced by the pricing point of the index (output or input) and practical considerations such as the relative degree of concentration of buyers, and of sellers, and the implications for sample sizes and costs. Prices are collected from approximately 2,900 businesses for approximately 1,700 products. Around 25,000 individual prices are collected each quarter. Prices for most items are collected once a quarter, with the collection spread across that period. As far as possible the prices used in the indexes are actual transaction prices.
Producer Price Indexes are a key economic indicator in most countries, including Australia. The first price index of this kind compiled by the ABS (known at the time as the Commonwealth Bureau of Census and Statistics) was the Melbourne Wholesale Price Index, which was introduced in 1912 with index numbers available from 1861 and ceased in 1961. Prices were extracted from newspapers and trade publications. The next index published was the Wholesale Price Index, which was introduced in 1939, with index numbers available from 1928, and ceased in 1970. With a few exceptions, prices were obtained from Melbourne sources.
In the 1970s, the ABS introduced a number of monthly price indexes about Price Indexes of Materials Used in Manufacturing Industries, Australia (cat. no. 6411.0) and Price Indexes of Articles Produced by Manufacturing Industry, Australia (cat. no. 6412.0), Price indexes of Materials Used in Coal Mining, Australia (cat. no. 6415.0) and Price Index of Materials Used in House Building, Six State Capital Cities (cat. no. 6408.0). The frequency of these indexes changed from monthly to quarterly in the September quarter 1997. The range of price indexes published by the ABS expanded to include Producer Price Indexes for Selected Service Industries, Australia (cat. no. 6423.0) in 2000 and to include the Output of the general construction industry in Producer Price Indexes, Australia (cat. no. 6427.0) in 2002. Also in 2000, the ABS introduced an overarching, economy wide set of indexes in a Stage of Production Producer Price indexes, Australia (cat. no. 6426.0).
Starting from June quarter 2001, the publications of these individual indexes were combined in the current Producer Price Indexes, Australia (cat. no. 6427.0) publication. The index of the output of the Retail Trade industry was included from the September quarter 2013 issue, in a data series starting from 2003.
Generally, as most of the weighting patterns of the producer price indexes are derived from National Accounts Input–Output (I–O) data, these indexes are reviewed when more recent I–O data as well as other ABS data and industry information becomes available. To maintain continuous index series, the updated indexes are linked to the previous index series. The PPI are chained Lowe indexes. Item weights are currently based on the 2012–13 I–O values, using the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0).
Index numbers are released as final figures at the time they are first published. Revisions will only occur in exceptional circumstances.
Movements in indexes from one period to another can be expressed either as changes in index points or as percentage changes. Percentage changes are calculated to illustrate three different kinds of movements in index numbers:
Care should be exercised when interpreting quarter–to–quarter movements in the indexes as short–term movements do not necessarily indicate changes in trends.
Detailed information, including a range of time series spreadsheets, can be found in the "Downloads" tab of this webpage. For links to data and publications relating to the producer price indexes and other price indexes, please see Price Indexes and Inflation.
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