GLOSSARY
ABS
Australian Bureau of Statistics
Aggregation
The process of combining lower level price indexes to produce higher level indexes.
All groups
Highest level of the CPI, containing all the groups, subgroups and expenditure classes.
APR
Arithmetic mean of price relatives - refer to Chapter 4 for the formula.
APRA
Australian Prudential Regulation Authority
COICOP
Classification of Individual Consumption by Purpose
Cost of living index
A measure of the change in household income required to maintain a constant level of utility.
CPI
Consumer Price Index - a general indicator of the rate of change in prices paid by households for consumer goods and services.
CPI basket
A commonly used term for the goods and services priced for the purpose of compiling the CPI.
CPI population group
The subset of the Australian population to which the CPI specifically relates. For the 15th series CPI this is all metropolitan private households.
Elementary aggregate
The lowest level of commodity classification in the CPI, and the only level for which index numbers are constructed by direct reference to price data.
Expenditure class
A group of similar goods or services. The level at which weights are fixed for the life of an index series, and the lowest level for which indexes are regularly published. There are ninety expenditure classes in the 15th series CPI.
Expenditure aggregate
The current cost in dollars per year of purchasing the same quantity of goods and services that were purchased in the weighting base period by the CPI population group.
GM
Geometric mean - refer to Chapter 4 for the formula.
Gross premiums
Total premiums payable by policy holders for general insurance.
Group
The first level of disaggregation of the CPI. There are eleven groups in the 15th series CPI.
Goods and Services Tax (GST)
An ad valorem tax applied to supplies (goods and services produced or delivered) by registered suppliers engaged in taxable activity. The GST is effectively only paid by final consumers. The legislated rate of GST is 10 per cent.
HFCE
Household Final Consumption Expenditure
HEC
Household Expenditure Classification. The classification used to analyse the results of the Household Expenditure Survey.
HESA
Higher Education Support Act
HICP
Harmonised Indices of Consumer Prices is an index structure devised and used by the European Union.
Household Expenditure Survey (HES)
A sample survey conducted by the ABS to determine the expenditure patterns of private households. Data from the 2003-04 HES are the primary source of information for the expenditure weights for the 15th series CPI.
ILO
International Labour Organization
Indexation
The periodic adjustment of a money value according to changes in a price index.
Inflation
A term commonly used to refer to changes in price levels. A rise in prices is called inflation, and a fall is called deflation.
Link factor
A ratio used to join a new index series to an old index series to form a continuous series.
Matched sample
In a matched sample, items that are priced from period to period are identical in all respects.
Metropolitan
For purposes of the CPI, metropolitan refers to the six State capital cities, Darwin and Canberra.
PPI
Producer price index
Premium supplements
The value of premium supplements is equal to the total income earned by insurance companies through the investment of their technical reserves.
Price index
A composite measure of the prices of items expressed relative to a defined base period.
Price levels
Actual money values at a particular time.
Price movements
Changes in price levels between two or more periods. Movements can be expressed in money values, as price relatives, or as percentage changes.
Price relative
A measure of price movements: the ratio of the price level in one period to the price level in another.
Private households
Households living in private dwellings. Private dwellings exclude prisons, nursing homes for the aged, defence establishments, hospitals, and other communal dwellings.
Quality Adjustment
The elimination of the effect that changes in the quality or composition of an item have on the price of that item in order to isolate the pure price change.
RAP
Relative of average prices - refer to Chapter 4 for the formula.
RBA
Reserve Bank of Australia
Reference base
The period in which the CPI is given a value of 100.0. The CPI is currently on a reference base of 1989-90. The reference base should not be confused with the weighting period - see Weighting base period below.
Regimen
The selected goods and services priced for the purpose of compiling a price index.
Splicing
A technique used to introduce new items or respondents into the index calculations so that the level of the index is not affected.
Subgroup
A collection of related expenditure classes. There are thirty three subgroups in the 15th series CPI.
Superlative index
A superlative index is one of a small group of indexes that makes equal use of prices and quantities, and treats them in a symmetrical manner in each pair of periods under observation. Examples are the Fisher Index and the Tornqvist Index. Superlative indexes require both price and expenditure values for all periods.
The New Tax System (TNTS)
A package of changes to the taxation and social-welfare system including the introduction of GST, and the changes to business taxation announced in response to the review of business taxation.
Technical reserves
The technical reserves held by general insurance companies include prepayments of premiums, and reserves against outstanding claims.
Transaction prices
The prices actually paid by consumers to acquire goods and services.
Utility
Often defined as the satisfaction derived from consumption of a good or service.
Weight
The measure of the importance of an item in the index regimen relative to the other items. Weights can be expressed in either quantity or value terms. Value weights are used in the CPI.
Weighting base period
The period to which the fixed quantity weights relate. The weighting base period for the 15th series CPI is 2003-04 (see also Reference base.)
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