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This document was added or updated on 07/08/2020.
CPI exclusion-based measures
Table 1 shows both the quarterly and annual movements for selected exclusion-based measures and can be used to compare to the headline CPI. For example, when excluding child care and automotive fuel from the CPI, the quarterly movement is -0.1 per cent compared to -1.9 per cent for the headline CPI. This highlights the strong downward impact that free child care and price falls in automotive fuel has had on the June 2020 quarter CPI movement.
How to calculate exclusion-based series
Points contributions, available in table 12 of the CPI release, can be used to calculate exclusion-based measures. The sum of the points contributions of all lower level components equals the overall CPI index value. The points contribution of selected components can then be excluded and the CPI re-calculated.
Measuring the quarterly price change that would occur when excluding a CPI component is calculated by subtracting the points contribution of the CPI component from the CPI index number in each quarter and then calculating the percentage change between the resulting index. ‘CPI excluding automotive fuel’ series has been used as an example in table 2.
Table 2: Calculating exclusion-based measure example
Table 2 shows that prices of all items other than automotive fuel decreased by 1.3 per cent on average between the March 2020 quarter and June 2020 quarter.
The June 2020 quarter saw COVID-19 have a significant impact on a range of CPI components. This article has demonstrated how excluding these components from the headline CPI provides new insights into the level of inflation in the Australian economy.
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