6422.0 - Information Paper: Producer Price Indexes Developments, 1999  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 25/03/1999   
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1.1 The ABS publishes a range of producer price indexes as well as international trade price indexes. Each index is a stand-alone measure relating to a particular segment of economic activity. The producer price indexes are industry-based, net sector indexes of materials used and articles produced by major goods producing industries, while the international trade price indexes relate to merchandise imports and exports.

1.2 The indexes are on various valuation bases with the input measures at purchasers’ prices (1) and the output measures at basic prices. Each of the indexes can be viewed as a partial economic indicator, rather than an economy-wide measure.

    (1) The purchaser's price is the amount paid by the purchaser inclusive of indirect taxes (less subsidies), trade margins (wholesale and retail) and transport costs. That is, the price for a commodity supplied to the purchaser. The basic price is the amount received by the producer exclusive of indirect taxes (less subsidies), and transport and trade margins. That is, it is the ex-plant price.
1.3 The net sector basis (as opposed to gross sector) means that transactions between establishments classified to the same industry sector are out-of-scope. For example, sales of sugar to the soft drink industry are not included in the index for the output of the Food, Beverage and Tobacco Manufacturing Subdivision because establishments producing sugar are classified to the same industry Subdivision as those producing soft drink. That is, the transactions represent intermediate usage within that Subdivision of manufacturing and are netted out of the index. Rather, the transactions that are in-scope for the index are sales of sugar to:
      • establishments classified to industries other than Food, Beverage and Tobacco Manufacturing; and
      • final demand (e.g. final consumption or export).

1.4 A principal advantage of the net sector approach is that it avoids any potential distorting effects that may result from multiple counting of transaction prices as commodities flow through different production processes under a gross sector approach. However, while conceptually valid, these net sector measures are incomplete in terms of coverage of the targeted sectors of the economy because the intra-sector (or internal) transactions are excluded.

1.5 The existing range of producer and international trade price indexes has proven to be useful for identifying price changes sourced externally from the relevant industry sectors (e.g. the Price Indexes of Materials Used in Manufacturing Industries) or flowing from an industry sector to other parts of the economy or overseas (e.g. the Price Indexes of Articles Produced by Manufacturing Industry). They are used extensively for economic analysis, for national accounts deflation purposes and contract escalation, and it is intended to continue to compile and publish them. The available indexes are itemised below:
      • Price Indexes of Articles Produced by Manufacturing Industry, Australia (Cat. no. 6412.0)
      • Price Indexes of Materials Used in Manufacturing Industries, Australia (Cat. no. 6411.0)
      • Price Index of Materials Used in House Building, Six State Capital Cities (Cat. no. 6408.0)
      • Price Index of Materials Used in Building Other Than House Building, Six State Capital Cities (Cat. no. 6407.0)
      • Price Indexes of Materials Used in Coal Mining, Australia (Cat. no. 6415.0)
      • Price Indexes of Copper Materials, Australia (Cat. no. 6410.0)
      • Export Price Index, Australia (Cat. no. 6405.0)
      • Import Price Index, Australia (Cat. no. 6414.0).

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