APPENDIX 2 ANALYTICAL SERIES


INTRODUCTION

1 Each review of the Consumer Price Index, the ABS assesses the analytical requirements of its users and the current relevance of each special analytical series published. The following separate inflation series are currently published to assist users analyse the CPI:

• All groups CPI, seasonally adjusted;
• Underlying trend series, 'Trimmed mean' and 'Weighted median';
• International trade exposure series, Tradables component;
• International trade exposure series, Non-tradables component;
• All groups CPI, goods component;
• All groups CPI, services component;
• All groups CPI including Deposit and loan facilities (indirect charges);
• Market goods and services excluding 'volatile items';
• All groups CPI excluding a CPI group for each of the eleven CPI Groups;
• All groups CPI excluding Housing and insurance and financial services;
• All groups CPI excluding Medical and hospital services;
• All groups CPI excluding food and energy;
• All groups CPI excluding 'volatile items';

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 53 per cent of the All groups CPI by weight, have been classified as goods. The remaining 27 expenditure classes, accounting for approximately 47 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 . The 2013-14 Input-Output tables were used to update the classification in December quarter 2016.

9 More information is available in Australian National Accounts: Input-Output Tables (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 was replaced with standard ABS seasonal adjustment methodology with the introduction of the 16th series CPI. This ensures 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:

	(i) All Groups CPI, seasonally adjusted: where seasonality has been identified at the weighted average of eight capital cities level. Seasonal adjustment factors are calculated using the history of price changes up to the current quarter CPI and are revised each quarter. The time series began with the December quarter 1986, with an index reference period of 2011-12 = 100.0.
	(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 17th series, 57 out of the 87 expenditure classes are classified as seasonal. A description of which series are currently seasonally adjusted is published in Appendix 1 of every December quarter issue of Consumer Price Index, Australia (cat. no. 6401.0), following the annual seasonal re-analysis. Table A2.1 lists the expenditure class that are seasonally adjusted, current at the December quarter 2017.


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. The 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.

A2.1 17TH SERIES CPI EXPENDITURE CLASSES CLASSIFIED BY ANALYTICAL SERIES(a)(b)
			International Trade Exposure		Seasonal
CPI expenditure classes	Goods	Services	Tradables	Non-tradables	Including current period	Not including current period	Market goods and services excluding 'volatiles'
Bread	y			y			y
Cakes and biscuits	y		y		y		y
Breakfast cereals	y		y		y		y
Other cereal products	y		y		y		y
Beef and veal	y		y		y		y
Pork	y		y		y		y
Lamb and goat	y		y		y		y
Poultry	y			y		y	y
Other meats	y		y		y		y
Fish and other seafood	y		y		y		y
Milk	y			y		y	y
Cheese	y		y				y
Ice cream and other dairy products	y		y			y	y
Fruit(c)	y		y		y
Vegetables(c)	y		y		y
Eggs	y			y		y	y
Jams, honey and spreads	y		y				y
Food additives and condiments	y		y		y		y
Oils and fats	y		y			y	y
Snacks and confectionery	y		y		y		y
Other food products n.e.c.	y		y		y		y
Coffee, tea and cocoa	y		y				y
Waters, soft drinks and juices	y		y		y		y
Restaurant meals		y		y			y
Take away and fast foods	y			y		y	y
Spirits	y			y			y
Wine	y		y		y		y
Beer	y			y			y
Tobacco	y			y	y		y
Garments for men	y		y		y		y
Garments for women	y		y		y		y
Garments for infants and children	y		y		y		y
Footwear for men	y		y			y	y
Footwear for women	y		y		y		y
Footwear for infants and children	y		y		y		y
Accessories	y		y		y		y
Cleaning, repair and hire of clothing and footwear		y		y		y	y
Rents		y		y	y		y
New dwelling purchase by owner-occupiers	y			y			y
Maintenance and repair of the dwelling		y		y	y		y
Property rates and charges		y		y	y
Water and sewerage	y			y	y
Electricity	y			y	y
Gas and other household fuels	y		y		y
Furniture	y		y		y		y
Carpets and other floor coverings	y		y		y		y
Household textiles	y		y		y		y
Major household appliances	y		y		y		y
Small electric household appliances	y		y		y		y
Glassware, tableware and household utensils	y		y		y		y
Tools and equipment for house and garden	y		y			y	y
Cleaning and maintenance products	y		y				y
Personal care products	y		y				y
Other non-durable household products	y		y		y		y
Child care		y		y	y
Hairdressing and personal grooming services		y		y			y
Other household services		y		y			y
Pharmaceutical products	y			y	y
Therapeutic appliances and equipment		y	y
Medical and hospital services		y		y	y
Dental services		y		y	y
Motor vehicles	y		y		y		y
Spare parts and accessories for motor vehicles	y		y		y		y
Automotive fuel(c)	y		y			y
Maintenance and repair of motor vehicles		y		y		y	y
Other services in respect of motor vehicles		y		y	y
Urban transport fares		y		y	y
Postal services		y		y
Telecommunication equipment and services		y		y			y
Audio, visual and computing equipment	y		y		y		y
Audio, visual and computing media and services	y		y				y
Books	y		y		y		y
Newspapers, magazines and stationery	y		y		y		y
Domestic holiday travel and accommodation		y		y	y		y
International holiday travel and accommodation		y	y		y		y
Equipment for sports, camping and open-air recreation	y		y				y
Games, toys and hobbies	y		y		y		y
Pets and related products	y			y	y		y
Veterinary and other services for pets		y		y	y		y
Sports participation		y		y	y		y
Other recreational, sporting and cultural services		y		y	y		y
Preschool and primary education		y		y	y
Secondary education		y		y	y
Tertiary education		y		y	y
Insurance		y		y	y		y
Deposit and loan facilities (direct charges)		y		y			y
Other financial services		y		y			y
(a) As at December quarter 2017
(b) y = yes
(c) volatile items

1 Roberts, I (2005), Underlying Inflation: Concepts, Measurement and Performance, RBA Research Discussion Paper No 2005–05 <back