This article explains price measurement in the Australian National Accounts (ANA) and provides examples of different price indexes in the ANA. A case study looking at differences between ANA prices and the Consumer Price Index (CPI) is also provided.
Gross domestic product (GDP) is a measure of the total economic activity of an economy. Australian GDP estimates are available in current price and chain volume measures. Current price GDP measures the monetary value of economic activity. In a particular period, the total value of all transactions in an economy is equal to the sum of the individual transaction values in that period. When comparing current price estimates between time periods, the difference consists of both changes in volume and changes in price. Chain volume measures (CVMs) remove the price change effect to show the volume of activity in the economy.
The ANA publishes two measures of prices within the quarterly publication: chain price indexes and implicit price deflators (IPDs). Both price indexes are available at the component level for the expenditure measure of GDP (except for inventories). The price indexes can differ when there are large changes in expenditure shares as a proportion of GDP, as shown in Figure 1. Between 2008 – 2011 the Global Financial Crisis and subsequent global recovery drove fluctuations in the share of export expenditure, due to volatility in coal, iron ore and oil prices (see (a) on Figure 1) This led to larger movements in the chain price index than the IPD. From 2020 the COVID-19 pandemic drove large changes in expenditure shares of GDP as lockdowns, restrictions, and border closures decreased the expenditure share of household final consumption expenditure (HFCE) as a proportion of GDP (see (b) on Figure 1). The Russian invasion of Ukraine also contributed to price rises for liquefied natural gas (LNG), coal, and oil, which increased the expenditure share of total international trade as a proportion of GDP.
Source: The GDP chain price index in original terms is obtained from Table 4 in the Australian National Accounts quarterly publication whilst the GDP IPD in original terms was compiled from current price value obtained from Table 3 which is divided by the chain volume measure obtained from Table 2.