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SAMPLING


INTRODUCTION

7.1 To achieve the conceptual objective of measuring pure price changes over time, regular monitoring of the prices of goods and services acquired by the Consumer Price Index (CPI) population group is necessary. However, it is not possible in practice to price every single type or variety of good and service purchased by the CPI population group at each collection cycle. The ABS overcomes this practical problem by using purposive sampling procedures, where representative sets of goods and services are selected for regular pricing. Similarly, it is not practical to observe the prices of the selected goods and services in all retail outlets selling these items to the CPI population group. Again, the ABS uses purposive sampling to select a representative sample of outlets at which to price the selected items in each collection cycle.

7.2 With the availability of transactions (scanner) data, it is possible to include all items in some measures of price change. As of the December quarter 2017, the ABS has introduced new index methods, known as multilateral methods, for 28 ECs in the CPI. These methods enable a census of products to be used from transactions datasets and the weighting of prices at the product level, enhancing the quality of the CPI. For further detail on these methods, see Use of transactions data in the Australian CPI of this manual.

7.3 However, for other items in the CPI a sampling approach is required.


SELECTING THE GOODS AND SERVICES

7.4 The goods and services included in the CPI pricing samples are selected carefully to represent the range of types and varieties of goods and services bought by the CPI population group. Selection is made only after obtaining detailed information about the buying habits of the CPI population group, such as which varieties and brands of products are the largest selling types or which packaging sizes are most commonly purchased. This process involves extensive consultations with, for instance, retailers, manufacturers, importers, government authorities, and professional and trade associations. In selecting the items to be priced, the following factors are taken into consideration.

• The importance of the expenditure class relative to the total CPI. In general, the more important the expenditure class, the larger the number of items priced.
• The degree of homogeneity in the range of goods or services covered by the expenditure class. The more homogeneous the range, the fewer the number of price indicators required.
• The extent to which the various products covered by an expenditure class are subject to different influences and cost pressures which are likely to result in disparate movements in prices.
• The likelihood of the particular type of good or service continuing to be available on the market for a reasonable period of time. In general, it is preferable to price the same specific items for a reasonable length of time rather than having to change price indicators regularly when particular goods or services appear and then disappear after only a short time on the market.
• The extent to which the item can be defined and described clearly and unambiguously to ensure that the selected goods or services can be priced to constant quality over time. For example, in pricing confectionery it is likely that packaged, brand name chocolates would be easier to price to constant quality over time than loose chocolates with no identifying brand name.
• The availability of transactions data provides detailed item revenue data to enable evidence based selection of the highest revenue items. It also enables more timely replacement of items with falling revenues to newer items with increasing revenues.

• The importance of the expenditure class relative to others in the CPI. In general, the more important the item is (i.e. the larger the expenditure weight), the larger the sample.
• The number of suppliers of the good or service in the city concerned. Generally, the larger the number of suppliers, the larger the sample. In some cases, however, there may be only one supplier, such as a city council or transport authority.
• The degree of dispersion in prices among outlets. Where the expected dispersion in prices is large, the sample should be large too. For example, a large sample of fruit and vegetables outlets is usually needed. However, with newspapers, a small sample is sufficient because standard prices are generally adhered to.
• The geographical spread of outlets. As far as possible, the samples are selected to cover the main areas in which households from the CPI population group are known to make their purchases.
• The ownership of retail chains. Large retail chains frequently have an Australia-wide or state-wide pricing policy. In these cases, pricing one outlet in the chain would be considered sufficient to obtain a representative estimate of price movement for that chain.
• The availability of transactions data. Transactions data allows for full coverage of all stores within a city's metropolitan area to determine the average price paid for an item for a given month or quarter.