6461.0 - Consumer Price Index: Concepts, Sources and Methods, 2016
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 21/02/2017
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APPENDIX 2 ANALYTICAL SERIES
2 These analytical series are published in table 8 of Consumer Price Index, Australia (cat. no. 6401.0) and are compiled by taking subsets of the CPI basket. Each series and their composition are outlined below. GOODS AND SERVICES 3 The ABS has classified expenditure classes as goods or services based on the majority of products in each category. In the CPI, 60 out of the 87 expenditure classes, accounting for approximately 56 per cent of the All groups CPI by weight, have been classified as goods. The remaining 27 expenditure classes, accounting for approximately 44 per cent of the All groups CPI by weight, have been classified as services. INTERNATIONAL TRADE EXPOSURE 4 The CPI Tradables and Non-tradables series, collectively known as the International Trade Exposure series, measure the contribution of imported and domestic inflation to overall household inflation. Identifying the source of household inflation aides the understanding and forecasting of inflation; as well as supporting monetary and fiscal policy decisions. 5 The International Trade Exposure series classifies the CPI expenditure classes as either tradables or non-tradables by assessing the degree to which their prices are affected by domestic developments and international competition. The tradables and non-tradables series are available each quarter in table 8 of Consumer Price Index, Australia (cat. no. 6401.0). 6 Expenditure classes were defined as tradables firstly by assessing the level of imports and exports to Australian production. If exports or imports exceeded 10 per cent of Australian production, the expenditure class was classified, by default, as tradable. To determine the final classification, supplementary data were used to assess the appropriateness of each of the expenditure classes default classification. Following this, the contribution of domestic taxes and subsides to the price paid by consumers was analysed. Since taxes and subsidies are a domestic impact on inflation, these expenditure classes were classified as non-tradables where these make a large contribution to the price paid by consumers. 7 For further information see the feature article Review of the Consumer Price Index International Trade Exposure Series, Sep 2016 (cat. no. 6401.0). 8 The ABS released the tradables and non-tradables price indexes from the June quarter 1998 based on 1993-1994 and 1994-1995 Input-Output tables and related product correspondences. For the 15th series CPI, the tradable and non-tradable classification was based on the 2001-02 Input-Output data and related product correspondences. For the 16th series CPI, the 2006-07 Input-Output tables and related product correspondences were used and an optimal threshold of 10% was applied to determine whether an industry is exportable or importable. Beginning the December quarter 2016, the 2013-14 Input-Output tables were used in the updating of the classification. 9 More information is available in Australian National Accounts: Input-Output Tables, 2013-14 (cat. no. 5209.0.55.001). 10 Table A2.1 shows which expenditure classes are classified as tradables and which are classified as non-tradables. In aggregate, 49 expenditure classes, which account for approximately 35 per cent of the CPI by weight, are classified as tradables. The remaining 38 expenditure classes, accounting for approximately 65 per cent of the CPI by weight, are classified as non-tradable. SEASONALLY ADJUSTED SERIES 11 Seasonal adjustment helps the analysis of price movements as it estimates and then removes influences that are systematic and calendar related from a time series. The seasonal adjustment methodology used to produce analytical measures of underlying inflation from the 15th series CPI has been replaced with standard ABS seasonal adjustment methodology. This will ensure that seasonally adjusted CPI data are consistent with other ABS data and results in more transparent and robust analytical series. 12 The following analytical series are published using the ABS seasonal adjustment methodology:
(ii) Group and expenditure class level price indexes (seasonally adjusted): comprises the subset of seasonally adjusted groups and expenditure classes at the weighted average of eight capital cities level. The time series began at different time periods, the earliest being the September quarter 1972, with an index reference period of 2011-12 = 100.0. (iii) Trimmed mean and Weighted median: two measures of underlying inflation. In the 15th series, these measures were calculated using a seasonal adjustment methodology developed by the Reserve Bank of Australia (RBA)(footnote 1) . The 16th series replaced this methodology with standard ABS seasonal adjustment methodology. These time series began with the June quarter 2002, with an index reference period of 2011-12 = 100.0. (iv) Tradables and Non-tradables (seasonally adjusted): these series measure the contribution of imported and domestic inflation to overall household inflation at the weighted average of eight capital cities level. These time series began with the June quarter 1998, with an index reference period of 2011-12 = 100.0. 13 More information on the seasonal adjustment methodology is available in Information paper: Seasonal adjustment of Consumer Price Indexes, 2011 (cat. no. 6401.0.55.003). 14 At the introduction of the 16th series, 62 out of the 87 expenditure classes were classified as seasonal. A description of which series are currently seasonally adjusted is published in Appendix 1 of every September quarter issue of Consumer Price Index, Australia (cat. no. 6401.0), following the annual seasonal re-analysis. Current at the December quarter 2016, of the 87 expenditure classes, 58 are classified as seasonal. Table A2.1 lists the expenditure class that are seasonally adjusted, current at the December quarter 2016. MARKET GOODS AND SERVICES EXCLUDING 'VOLATILE ITEMS' 15 Market items are those available on the open market. The volatile items are Fruit, Vegetables and Automotive fuel DEPOSIT AND LOAN FACILITIES (INDIRECT CHARGES) 16 One of the outcomes of the 16th series review was to remove the indirectly measured component of the Deposit and loan facilities index from the headline CPI until such time that the methods and data sources are sufficiently robust for its reintroduction to the CPI. A new analytical series, All groups CPI including Deposit and loan facilities (indirect charges) includes the All groups CPI plus the indirectly measured component of the Deposit and loan facilities index.
1 Roberts, I (2005), Underlying Inflation: Concepts, Measurement and Performance, RBA Research Discussion Paper No 2005–05 <back Document Selection These documents will be presented in a new window.
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