6461.0 - Consumer Price Index: Concepts, Sources and Methods, 2011
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 19/12/2011
Page tools: Print All

CHAPTER 12 RE-REFERENCING AND LINKING PRICE INDEXES

REFERENCE PERIODS

12.1 The following reference periods are discussed in this chapter:

• Weight reference period is the period covered by the expenditure statistics used to calculate the weights. The weight reference period for the 16th series Consumer Price Index (CPI) is 2009-10.
• Price reference period is the period for which prices are used as denominators in the index calculation.
• Index reference period is the period for which the index is set to 100.0.

RE-REFERENCING

12.2 The ABS changes the index reference period (a process known as re-referencing) of the CPI from time to time, but not frequently. This is because frequently changing the index reference period is inconvenient for users, particularly those who use the CPI for contract escalation. Also re-referencing may result in the loss of some detailed historic data, especially for long series. In the March quarter 1992 the index reference period was changed from 1980-81 = 100.0 to 1989-90 = 100.0. The current CPI index reference period continues as 1989-90 = 100. The ABS has produced historical index numbers on the current base, so generally there is no need for users to do their own calculations.

12.3 The conversion of an index series from one index reference period to another involves calculating a conversion factor using the ratio between the two series of index numbers. For example, consider converting the Clothing group index for Perth from an index reference period of 1980-81 = 100.0 to 1989-90 = 100.0 (see Table 12.1). The index number for the 1989-90 Clothing group using an index reference period of 1980-81 is (181.5 + 186.4 + 185.8 + 188.6)/4 = 185.6 (rounded to one decimal place). Thus the conversion factor is 0.5388 (100.0/185.6) so that the March quarter 1989 index number, on an index reference period of 1989-90 = 100.0 is 95.4 (177.0×0.5388).

 12.1 Converting index reference periods, Perth Clothing Group Index reference period(a) Period 1980-81=100.0 1989-90=100.0 Mar qtr 1989 177.0 95.4 Jun qtr 1989 182.7 98.4 Sep qtr 1989 181.5 97.8 Dec qtr 1989 186.4 100.4 Mar qtr 1990 185.8 100.1 Jun qtr 1990 188.6 101.6 Financial year 1989-90 185.6 100.0 Sep qtr 1990 189.2 101.9 Dec qtr 1990 194.1 104.6 Mar qtr 1991 195.3 105.2 Jun qtr 1991 196.5 105.9 Sep qtr 1991 197.1 106.2 Dec qtr 1991 199.5 107.5 (a) Conversion factor: 1980-81 index reference period to 1989-90 index reference period = 100.0/185.6 = 0.5388.

12.4 Similar procedures are used to convert the 1989-90 index reference period to a 1980-81 index reference period. For example, the December quarter 1991 index for the Clothing group for Perth was 107.5 which, when multiplied by the conversion factor of 1.856 (185.6/100.0), gives an index number of 199.5 on the index reference period of 1980-81 = 100.0. It should be noted that a different conversion factor will apply for each index and city - that is, the factor for the Clothing group for Perth will differ from the factor for Automotive fuel for Perth, and for the Clothing group for Hobart.

12.5 Re-referencing should not be confused with reweighting. Re-referencing does not change the relative movements between periods. However reweighting involves introducing new weights and recalculating the aggregate index for each period which will affect the relative movements between periods.