Consumer Price Index, Australia methodology

• All groups CPI, seasonally adjusted: comprises all components included in the 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 month CPI and are revised each month.
• Where CPI expenditure classes are identified as having a seasonal pattern, monthly price changes are estimated on a seasonally adjusted basis. At the introduction of the 17th series, 57 out of the 87 expenditure classes were classified as seasonal. A description of which series are currently seasonally adjusted is published in the Appendix of every December issue of Consumer Price Index, Australia, following the annual seasonal reanalysis.

• The trimmed mean and weighted median are two analytical measures of trend inflation, first calculated from the June quarter 2002. Both measures are derived using standard ABS seasonal adjustment techniques. For further details, refer to the Information Paper: Seasonal Adjustment of Consumer Price Indexes, 2011.
• The trimmed mean and weighted median are constructed from the distribution of expenditure classes, which are derived as follows:
  • The CPI expenditure classes are ranked from lowest to highest according to the seasonally adjusted percentage change from the previous month.
  • The seasonally adjusted relative weight of each expenditure class is calculated based on its previous month contribution to the All groups CPI.
  • The 'Trimmed mean' is calculated using a weighted average of percentage change from the previous month (seasonally adjusted) from the middle 70 per cent of the distribution.
  • The 'Weighted median' is calculated using the percentage change from the previous month (seasonally adjusted) from the expenditure class at the 50th percentile of the distribution.

• International Trade Exposure series, Tradables component: comprises all items whose prices are largely determined on the world market.

• International Trade Exposure series, Non-tradables component: comprises all items whose prices are largely determined by domestic factors. All items not included in the Tradables component are included in the Non-tradables component.

Comprises the groups/sub-groups:

• Food and non-alcoholic beverages group (except restaurant meals)
• Alcohol and tobacco group
• Clothing and footwear group (except cleaning, repair and hire of clothing and footwear)
• Furnishings, household equipment and services group (except Domestic and household services sub-group)
• Utilities sub-group
• Audio, visual and computing equipment and services sub-group
• Newspapers, books and stationery sub-group.

Comprises the expenditure classes:

• New dwelling purchase by owner-occupiers
• Pharmaceutical products
• Motor vehicles
• Automotive fuel
• Spare parts and accessories for motor vehicles
• Equipment for sports, camping and open-air recreation
• Games, toys and hobbies  
• Pets and related products.

• All groups CPI, services component: comprises all items not included in the 'All groups CPI, goods component'. A description of which series are goods or services is published in the Appendix of the December 2017 issue of Consumer Price Index, Australia.

• All groups CPI excluding 'volatile items': Comprises the All groups CPI excluding Fruit and vegetables and Automotive fuel.

   

Market goods and services excluding 'volatile items', in addition to the items excluded from the series , All groups CPI excluding 'volatile items', this series also excludes: 

• Utilities
• Property rates and charges
• Child care
• Health
• Other services in respect of motor vehicles
• Urban transport fares
• Postal services
• Education.

• All groups CPI excluding Insurance and financial services: reflecting the changing composition of the CPI, from the September quarter 1989 to the June quarter 1998, comprises the All groups CPI excluding House insurance, House contents insurance, Vehicle insurance and Mortgage interest charges and consumer credit charges; from the September quarter 1998 to the June quarter 2000 comprises the All groups CPI excluding House insurance, House contents insurance and Vehicle insurance; from the September quarter 2000 to the June quarter 2005 comprises the All groups CPI excluding Insurance services; from the September quarter 2005 to the June quarter 2011 comprises the All groups CPI excluding Financial and insurance services; from the September 2011 comprises the All groups CPI excluding Insurance and financial services.

• All groups CPI excluding Housing and Insurance and financial services: Reflecting the changing composition of the CPI, from the September quarter 1989 to the June quarter 1998, comprises the All groups CPI excluding Housing, House contents insurance, Vehicle insurance and Consumer credit charges; from the September quarter 1998 to the June quarter 2000 comprises the All groups CPI excluding Housing, House insurance, House contents insurance and Vehicle insurance; from the September quarter 2000 to the June quarter 2005 comprises the All groups CPI excluding Housing and Insurance services; from the September quarter 2005 to the June quarter 2011 comprises the All groups CPI excluding Housing and Financial and insurance services; from the September 2011 comprises the All groups CPI excluding Housing and insurance and financial services.

• All groups CPI excluding food and energy: Comprises the All groups CPI excluding the Food and non-alcoholic beverages group (except restaurant meals); Electricity, gas and other household fuels; and Automotive fuel.

The International Trade Exposure series was reviewed and updated for the December quarter 2016. There were eight changes of classification outlined in the September quarter 2016 feature article 'Review of the Consumer Price Index International Trade Exposure Series': Breakfast cereals; Waters, soft drinks and juices; Gas and other household fuels; Therapeutic appliances and equipment; and Newspaper, magazines and stationery were reclassified from non-tradables to tradables: and Spirits; Tobacco; and Pharmaceutical products were reclassified from tradables to non-tradables. These changes are included from the December quarter 2016. The historical tradables and non-tradables series will not be revised. A description of which expenditure classes are tradables or non-tradables is published in the Appendix of the December 2017 issue of Consumer Price Index, Australia.

For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.

The Australian Consumer Price Index (CPI) is conceptually designed to provide a general measure of price inflation for all Australian households. In practice, the index is constrained to only measure the changes in prices faced by private households living in the six state and two territory capital cities.

The simplest way of thinking about the CPI is to imagine a basket of goods and services comprising items bought by Australian households. Now imagine the basket is purchased each month. As prices change from one month to the next, so too will the total price of the basket. The CPI is simply a measure of the changes in the price of this fixed basket as the prices of items in it change.

The total basket is divided into 11 major groups, each representing a specific set of commodities: 

• Food and non-alcoholic beverages
• Alcohol and tobacco
• Clothing and footwear
• Housing
• Furnishings, household equipment and services
• Health
• Transport
• Communication
• Recreation and culture
• Education
• Insurance and financial services.

In the case of the Australian CPI, this methodology involves devising a basket of goods and services representative of those acquired by metropolitan private households during the course of a full year. The annual basket used in the CPI is based primarily on data obtained from the Household Expenditure Survey (HES), which is an authoritative source of data on the expenditures of different household types in each of the capital cities.

The CPI is an important economic indicator used in formulating monetary policy and in a wide range of business, economic and social analysis and decision-making.

Seasonal adjustment is used to produce additional analytical series, such as 'All groups CPI, seasonally adjusted', and the underlying trend series (Trimmed mean and Weighted median). The seasonally adjusted estimates for the expenditure classes contributing to these analytical series are included in the Time Series Spreadsheets. The headline figure, however, remains as the original estimate of the 'All groups CPI'.
 

The Monthly CPI is generally released four weeks after the end of the reference month. The exception is November, which is released in January due to the Christmas / New Year holiday period. 

Prior to October 2025, the CPI was published on a quarterly basis. 

The overall (or All groups) CPI provides a measure of the average rate of price change. In calculating an average measure of this type it is necessary to recognise that some items are more important than others. Measures of expenditure on each of the 87 CPI expenditure classes are obtained from the HES, which is an authoritative source of data on the expenditures of different household types in each of the capital cities. It is important to understand that the composition of the basket and the relative importance of items in it relate to households as a whole - it represents the expenditures of all in scope households, not the expenditure pattern of an “average household” or of any particular household type or size.

The collection of prices in each capital city is largely carried out by trained ABS staff. Prices are collected in the kinds of retail outlets and other places where metropolitan households purchase goods and services. This involves collecting prices from many sources such as supermarkets, restaurants, airlines and schools. Prices are collected online, via telephone, and from administrative and transactions datasets as appropriate. 

In total, almost 900,000 separate price quotations are collected each month. The frequency of price collection by item varies as necessary to obtain reliable price measures. 

The CPI takes account of any changes in the quality of the items priced to ensure that the index reflects only pure price change. Items available in stores are constantly changing. The CPI identifies changes to item specifications and adjusts observed prices to eliminate quality differences.

The CPI uses a hierarchy of rounding procedures to ensure consistency between published index numbers and percentage changes. However, rounding differences can arise in the "points contributions" published in tables 13, 14 and 15 because of the different levels of precision required in those data. Index numbers are released as final figures at the time they are first published. Revisions have never occurred and will only occur in exceptional circumstances.

The CPI was first compiled in 1960, with index numbers backcast to 1948. Since its inception in its current form in 1960, reviews of the CPI have usually been carried out at about six-yearly intervals. From the introduction of the 17th series CPI in the December quarter 2017, reviews are conducted annually. Following each review, which involves revising the list of items and their weights, the new series are linked to the old to form a continuous series. This linking is carried out in such a way that the resulting continuous series reflect only price changes and not differences in the composition of the old and new baskets. This approach allows changes in expenditure patterns to be reflected in the CPI. The data are comparable from the start of each data series.

In analysing price movements in Australia, an important consideration is Australia's performance relative to other countries. However, a simple comparison of All groups (or headline) CPIs is often inappropriate because of the different measurement approaches used by countries for certain products, particularly housing and financial and insurance services. To provide a better basis for international comparisons, the Seventeenth International Conference of Labour Statisticians adopted a resolution which called for countries to 'if possible, compile and provide for dissemination to the international community an index that excludes housing and financial services', in addition to the all-items index.

The Consumer Price Index (CPI) publication contains Explanatory Notes that provide information about the structure, weights, data sources and other technical aspects of the series. Further information is available in A Guide to the Consumer Price Index: 17th Series. Another useful source is Information Paper: Introduction of the 17th Series Australian Consumer Price Index. More detailed information can also be found in Consumer Price Index: Concepts, Sources and Methods.

A link to the latest issue of the Consumer Price Index can be found on the ABS home page www.abs.gov.au. Detailed information, including a range of time series spreadsheets, can be found in the data download section on the topic page. For links to data and publications relating to the Consumer Price Index and other prices series, please see the Price Indexes & Inflation topics.

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