6467.0 - Selected Living Cost Indexes, Australia, Sep 2012  
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APPENDIX 1 RE-REFERENCING THE SELECTED LIVING COST INDEXES

From the September quarter 2012, the ABS harmonised the index reference periods for the Selected Living Cost Indexes (SLCIs). These series are now presented on an index reference period of 2011–12 = 100.0. The old index reference period for the Pensioner and Beneficiary Living Cost Index (PBLCI) was June quarter 2007 = 100.0 and for the Analytical Living Cost Indexes for Selected Australian Household Types (ALCIs) was June quarter 1998 = 100.0. The Consumer Price Index (CPI) has also been re-referenced from an index reference period of 1989-90 = 100.0 to a new index reference period of 2011-12 = 100.0.

The ABS has provided conversion factors in Table 1 below. This enables users to convert previously published time series to the new index reference period or to convert index numbers on the new index reference period to the previous time series index reference period.


CONVERTING AN OLD TIME SERIES TO THE NEW INDEX REFERENCE PERIOD

The conversion of index numbers from an old index reference period to the new index reference period involves a rescaling of the index numbers. The conversion factors that should be applied to the index numbers are calculated by obtaining the ratio of the index numbers on the old (June quarter 2007 = 100.0 or June quarter 1998 = 100.0) index reference period to the new index reference period (2011–12 = 100.0). Index numbers for financial years are calculated as the simple (arithmetic) averages of the four quarterly index numbers for that financial year.

An example of re-referencing, using the All groups CPI, Weighted average of eight capital cities index numbers is shown below:

All groups CPI, weighted average of eight capital cities, index numbers

Index reference period
Period
1989-90=100.0 (old)
2011-12=100.0 (new)

2010-11
March quarter 2011
176.7
98.3
June quarter 2011
178.3
99.2
2011-12
September quarter 2011
179.4
99.8
December quarter 2011
179.4
99.8
March quarter 2012
179.5
99.9
June quarter 2012
180.4
100.4
Financial year 2011-12
(a)179.7
(b)100.0

(a) Index number for financial year 2011-12 (index reference period 1989-90 = 100.0) = (179.4 + 179.4 + 179.5 + 180.4)/4 = 179.7
(b) Index number for financial year 2011-12 (index reference period 2011-12 = 100.0) = (99.8 + 99.8 + 99.9 + 100.4)/4 = 100.0


A conversion factor is calculated as follows:

Rounded conversion factor = 100.0/179.7 = 0.5565

Index number for the June quarter 2012 (index reference period 1989-90 = 100.0) = 180.4

Index number for the June quarter 2012 (index reference period 2011-12 = 100.0) = 180.4 x 0.5565 = 100.4

The conversion factor may be used to convert any historical All Groups CPI, weighted average of eight capital cities index numbers to the new index reference period. Different conversion factors will be required for each index series.

NOTE: The above example is calculated using the published index numbers that have been rounded to one decimal. The ABS has calculated the conversion factors from unrounded index numbers, to obtain a greater degree of precision. The preferred conversion factors which use this greater degree of precision are available in Table 1 below.

CONVERTING THE RE-REFERENCED SERIES BACK TO THE OLD INDEX REFERENCE PERIOD

Similarly, to convert index numbers on the new index reference period back to the old index reference period will also require rescaling of index numbers. The conversion factors that should be applied are obtained by taking the inverse of the previously described conversion factor.

Using the example above, a conversion factor is calculated as follows:

Rounded conversion factor = 179.7/100.0 = 1.7970

Index number for the June quarter 2012 (index reference period 2011-12 = 100.0) = 100.4

Index number for the June quarter 2012 (index reference period 1989-90 = 100.0) = 100.4 x 1.7970 = 180.4

The conversion factor may be used to convert any historical All Groups CPI, weighted average of eight capital cities index number to the old index reference period. Once again, different conversion factors will be required for each index series.

ROUNDING

Index numbers and percentage changes are always published to one decimal place, with the percentage changes being calculated from the rounded index numbers. A consequence of re-referencing price indexes can be that period-to-period percentage changes may differ slightly to those previously published. These differences do not constitute a revision of the index series and are simply the effect of rounding and the re-referencing. There may be slight differences between user calculations and published values due to the greater level of precision of the values used in calculations performed by the ABS.

It should be noted that a different conversion factor will apply for each Selected Living Cost index series. For example the conversion factor for Pensioner and beneficiary households, All Groups will differ from the factor for Employee households, All Groups and for Employee households, Gross insurance. Conversion factors for converting to the new index reference period are provided in Table 1 below.

For further information, contact the National Information and Referral Service Hotline on 1300 135 070. The ABS provides further information on re-referencing in Consumer Price Index: Concepts, Sources and Methods, 2011 (cat. no. 6461.0) and Frequently Asked Questions available at <https://www.abs.gov.au>.

CONVERSION FACTORS
Table 1. Selected living cost indexes, Weighted average of eight capital cities, Conversion factors, to index reference period 2011-12=100.0


Pensioner and beneficiary households
(a)
Employee households
(b)
Age pensioner households
(b)
Other government transfer recipient households
(b)
Self-funded retiree households
(b)

Gross insurance
. .
0.5098
0.4982
0.5077
0.5050
Mortgage interest charges
. .
0.3680
0.3685
0.3665
0.3670
Consumer credit charges
. .
0.6500
0.6503
0.6490
0.6507
All Groups
0.8548
0.6547
0.6523
0.6428
0.6751

. . not applicable
(a) from index reference period June quarter 2007=100.0
(b) from index reference period June quarter 1998=100.0

CPI Conversion factors for converting the CPI index values to the new index reference period are provided in 'Table 17 - CPI conversion factors, from index reference period 1989-90 to 2011-12' available as a data cube on the 'Downloads' tab of the September quarter 2012 issue of Consumer Price Index, Australia (cat. no. 6401.0).