The Australian Producer Price Indexes (PPIs) are a collection of indexes that measure the price change of products (goods and services) as they leave the place of production or as they enter the production process. This price change is measured from the perspective of the industries that produce goods and services. Other measures, such as the Consumer Price Index (CPI), measure price change from the consumers' perspective. When measuring prices from the seller’s perspective, factors such as distribution costs, taxes and the impact of government subsidies are generally excluded.
Producer Price Indexes, Australia methodology
Overview
Scope
The quarterly PPI measures the change in prices of goods and services in Australia as they leave or enter the production process. More details on scope of each index can be found under Indexes
Geography
Producer Price Indexes are available at the national level, and state or capital city level for selected indexes
Source
Prices for a range of goods and services are collected from a sample of businesses undertaking economic activity in Australia, and supplemented by using internal ABS data sources and publicly available administrative data
Collection method
Prices are collected via a webform based tailored survey questionnaire
Concepts, sources and methods
Descriptions of the underlying concepts and methods used are available in the PPI and ITPI Concepts, Sources and Methods
History of changes
- Childcare Services Cost Index released December quarter 2024
- For a detailed list see History of changes
Introduction
About PPI
General
Industry versus product
From the September quarter 2012, Producer Price Indexes relate to all products that are used or produced by establishments classified, according to the Australian and New Zealand Standard Industrial Classification 2006 edition (ANZSIC 2006) to a specific industry division, including secondary production. Primary products are defined as products which are strictly classified to a particular industry division, as defined by ANZSIC 2006. The production of products outside these strict industry division classifications are considered as secondary production. Prior to the September quarter 2012, Producer Price Indexes related only to products primary to a specific industry division.
Gross versus net
Producer Price Indexes are compiled on a gross industry basis. This means that the scope of the indexes includes all transactions occurring within an industry, and between that industry and other industries. This approach aligns with the principal purpose of the Producer Price Indexes, which is to support the compilation of the Australian National Accounts and Balance of Payments.
Output and input
Producer Price Indexes are constructed as either output or input measures. The Output indexes relate to products (goods and services) produced by establishments, classified to a specific industry. The Input indexes relate to products (goods and services) classified to specific industries, used by establishments as part of the production process.
Valuation basis
The valuation basis for the transactions covered by an output index is basic price, defined as the amount received by the producer, exclusive of any taxes on products, transport, and trade margins (i.e. the pricing point is ex-factory, ex-farm, ex-service provider, etc.). A government subsidy on products paid to a producer would also generally be included in the basic price.
The valuation basis for the transactions covered by an input index is purchasers' price, defined as the amount paid by the purchaser, inclusive of any non-deductible taxes on products, transport, and trade margins (i.e. the prices recorded in the index should be those relating to products 'delivered into store', 'delivered on site', etc.).
In reality, industry practice may mean that it is sometimes necessary to diverge from the conceptually ideal price in order to obtain actual transaction prices. For example, although the conceptually ideal price for the Output of the Manufacturing industries price indexes is ex-factory, in cases where costs such as handling and distribution are built into the manufacturer's selling price, they will be included in the index.
Similarly, for input indexes such as the Input to the House construction industry price index, which has a conceptually ideal price of delivered on site, it has sometimes been necessary to use the nearest actual transaction price available, e.g. prices of products supplied and fixed.
The Goods and Services Tax (GST) is excluded from all prices recorded in the Producer Price Indexes. The GST is a deductible business-to-business transaction. In the case of the Services industries Output indexes relating to business-to-household transactions, the GST is also excluded as the price indexes are valued in basic price (i.e. exclusive of product taxes).
Products and weights
The indexes are weighted based on the Lowe index formula, i.e. proportional weights for each of the components are fixed in a specified earlier period. The list of products and the weights are updated periodically to ensure they remain representative of the activities of providers in the Australian economy. Index series compiled using updated weights are linked to earlier series to maintain a continuous series. Upper level weights are derived from the Australian National Accounts: Input-Output Tables as well as other ABS and industry sources. For more information on weighting methodology see Producer and International Trade Price Indexes: Concepts, Sources and Methods.
Price measurement
The main sources of ongoing price data are samples of business establishments. These can be buyers or sellers, dependent on whether the price is contributing to an input or an output price index. Practical considerations such as the relative degree of concentration of buyers and of sellers, along with the implications for sample size and cost will be taken into account when determining samples.
The main pricing methodology is specification pricing, under which a sample of precisely specified products is selected, in consultation with each reporting establishment, for repeat pricing. In specifying the products, care is taken to ensure that they are fully defined in terms of all the characteristics which influence their transaction prices. As such, all the relevant technical characteristics need to be described (e.g. make, model and features) along with the unit of sale, type of packaging, conditions of sale (e.g. delivered, payment within 30 days) etc.
When the quality or the specifications of a product being priced change over time, adjustments are made to the reported prices so that the index captures only pure price change. That is, any element of price change attributable to a change in quality is accounted for and removed wherever possible. If there is a change in the quality of a product, the price is adjusted accordingly to reflect the value of the quality change. This technique is known as pricing to constant quality.
Another important consideration when establishing and maintaining price collections is to ensure that the prices reported are actual market transaction prices. That is, they must reflect the actual prices received (or paid) after taking into account all discounts applied to the transaction. These discounts could include volume discounts, settlement discounts or competitive price cutting discounts, which are likely to fluctuate with market conditions.
Any rebates also need to be considered. The collection of nominal list prices, or book prices, is unlikely to yield reliable price indexes and could result in misleading results if fluctuations in transaction prices are not captured. The ABS therefore asks provider business establishments to report details of the discounts they offer so that actual transaction prices can be calculated.
Specification pricing is not feasible in cases where the products are unique and not reproduced over time, e.g. the Output of the Construction industries indexes and many customised business services. As a result, alternative pricing techniques need to be used, which sometimes require a compromise. Some of the approaches adopted include the use of model pricing, collecting unit values for reasonably homogeneous components of a product, input pricing and collecting charge-out rates (e.g. for a legal service).
Where prices of products are expected to move in a similar way, many of the directly priced products are taken to be representative of similarly classified products which are not directly priced. The main advantages of this method include more effective use of ABS resources and reduced burden on business establishments who provide the ABS with price information.
Classifications
From the September quarter 2012, all Producer Price Indexes have been constructed in accordance with the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition. Prior to the September quarter 2012, the Stage of Production (SOP) series (Tables 1-10) were classified on an ANZSIC 1993 basis. Producer Price Indexes relating to products primary to specific industries were based on ANZSIC 2006 from the September quarter 2009 onwards.
Products are classified to their industry of origin according to ANZSIC 2006 and the Input-Output Product Classification (IOPC) tables, where each product is shown according to the industry in which it is primarily produced. The IOPC tables are consistent with ANZSIC 2006 and are identified by an 8 digit code. For output price indexes, ANZSIC 2006 is used to classify the industry of a producer of a given product (industry of origin). For input indexes, ANZSIC 2006 is used to classify the industry of a purchaser of a given product (industry of consumption).
Uses
The Producer Price Indexes are used by the government and private sector for a variety of purposes:
- as deflators in the Australian National Accounts
- as a short–term indicator of inflationary trends
- for indexation in legal contracts in both the public and private sectors
- to inform business and government policy decisions
- by international organisations such as the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF) for economic monitoring and comparison.
Use of price indexes in national accounts
The Producer Price Indexes are used to deflate values of a number of components in the Australian National Accounts, including industry inputs and outputs, sales, capital expenditure and inventory data to produce chain volume measures. The deflation process is integral to the compilation of Gross Domestic Product and its components. Price deflation is achieved by dividing the current price value for a period (quarter or year) by a measure of the price component (usually in the form of a price index) for the same period. This technique re-values the current price value in the prices of a base period (in the Australian volume measures this is generally the previous year). See more details in Producer and International Trade Price Indexes: Concepts, Sources and Methods.
Use of price indexes in indexation clauses
Price indexes published by the Australian Bureau of Statistics (ABS) provide summary measures of the movements in various categories of prices over time. They are published primarily for use in Government economic analysis.
Price indexes are also often used in contracts by businesses and government to adjust payments and/or charges to take account of changes in categories of prices (Indexation Clauses).
Although the ABS acknowledges that the various price indexes it publishes are used by businesses and government to adjust payments and/or charges, it neither endorses nor discourages such use. See more details in Use of Price Indexes in Contracts.
The role of the ABS as the central statistical authority for the Australian government includes publishing price index data, and broadly explaining the underlying methodology and general limitations on such data. The ABS may provide information on price indexes that it publishes, but will not recommend or comment on the use (or otherwise) of the price indexes. In addition, the ABS does not advise, comment or assist in preparing or writing contracts, nor does it provide advice on disputes arising from contract interpretation. See more details in Producer and International Trade Price Indexes: Concepts, Sources and Methods.
Quality declaration
Institutional environment
The Australian Bureau of Statistics (ABS) is independent of government, with the Australian Bureau of Statistics Act 1975 giving the Statistician the power to control the operations of the ABS. For further information on the institutional environment of the ABS , including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.
Relevance
The Australian Producer Price Indexes (PPI) measure the changes in the price of goods and services as they leave or enter the production process. As it is not possible to construct an index which includes every transaction of every product, the ABS selects representative products and transactions, and determines their relative importance in calculating overall price movements. Periodic updates to both the sample and weights are required to maintain relevance of the PPIs, especially given the nature of changes to products, inputs, customers and condition of sale. Maintenance strategies and review programs are in place to ensure that price indexes continue to be representative. For more details on how these are implemented see Producer and International Trade Price Indexes: Concepts, Sources and Methods.
Timeliness
The Producer Price Indexes are released on a quarterly basis to coincide with the compilation of Australian National Accounts and the Balance of Payments. The publication is released no later than 33 days after the end of the reference quarter.
Accuracy
There are two principal sources of error in surveys: sampling error and non–sampling error. Non–sampling error arises from inaccuracies in collecting, recording and processing the data.
Every effort has been made to reduce non–sampling error in the PPI, by:
- careful design of questionnaires and processing systems
- providing instructions to businesses on how to price a relevant sample of producer transactions
- detailed checking of completed survey forms
- instituting a range of procedures to ensure that transactions are priced to constant quality and quantity.
Sampling error occurs when a sample or subset of the population is surveyed rather than the entire population.
The Producer Price Indexes measure price changes, over time, in selected industries of the Australian economy. Transactions collected for each of the industries included in the PPI may cover purchase and sales of thousands of different products at a wide variety of prices. The sheer volume and complexity of these transactions mean that a non–probability sampling method is more practicable and efficient than probability sampling methods. A non–probability sampling method involves choosing producers based on the relative importance of the products they sell or buy, who they sell to or buy from and the nature of their pricing policies.
One measure of the likely difference resulting from not including all of the population in the survey is given by the standard error. The selection of producer transactions are based on sampling techniques, and sampling error for level estimates are considered in the sample maintenance strategies. However, as the PPI uses both sampling and index methodologies, a standard error is not compiled for the indexes.
Coherence
The Australian Producer Price Indexes are compiled in broad agreement with the guidelines contained in the International Monetary Fund’s Producer Price Index Manual, Theory and Practice (2004). The principal purpose of the Producer Price Indexes is to measure price change by industry to support the compilation of the Australian National Accounts. This requires that their compilation be on a basis coherent with the frameworks underlying those of the statistics of the Australian System of National Accounts, which informs many aspects of the current methodology of the Producer Price Indexes. For detailed information see Producer and International Trade Price Indexes: Concepts, Sources and Methods.
Interpretability
Movements in indexes from one period to another can be expressed either as changes in index points or as percentage changes. Percentage changes are calculated to illustrate three different kinds of movements in index numbers:
- movements between consecutive financial years (where the index numbers for financial years are simple averages of the quarterly index numbers)
- movements between corresponding quarters of consecutive years
- movements between consecutive quarters.
The different Producer Price Indexes are compiled separately. They measure price change over time within the individual index, and do not represent the differences in price levels between industries. Care should be exercised when interpreting quarter–to–quarter movements in the indexes as short–term movements do not necessarily indicate changes in trends.
Further information is available in Producer and International Trade Price Indexes: Concepts, Sources and Methods.
Accessibility
A link to the latest issue of the Producer Price Indexes can be found on the ABS home page. Detailed information, including a range of time series spreadsheets, can be found in the Data downloads section on the topic page. For links to data and publications relating to the Producer Price Index and other prices series, please see the Price Indexes & Inflation topics.
For enquiries about these and related statistics, contact the Customer Assistance Service via the ABS website Contact Us page. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.
Indexes
Final demand Producer Price Index
Introduction
The Final demand index is an output index relating to products consumed within the Australian economy, with no further processing. The index covers both domestically produced and imported products ready to be sold for immediate domestic consumption or capital formation. As this index focuses on domestic inflation, exported products consumed outside of the Australian economy are excluded.
In the quarterly Producer Price Index (PPI) publication, Table 1 presents the Final demand index, with Table 5 presenting the contribution to the Final demand index by selected lower-level industries.
Scope
The scope of the Final demand index is primarily linked to the principle purpose of the Australian National Accounts, which reflects key economic flows and the structure of the economy. The Final demand index uses the Input-Output (I-O) framework to present a comprehensive picture of the supply (output) to domestic consumption and capital formation.
Classification
Products are classified to their industry of origin according to the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006, and the Input-Output Product Classification (IOPC) tables, where each product is shown according to the industry in which it is primarily produced. The IOPC tables are consistent with ANZSIC 2006 and are identified by an 8 digit code. For output indexes, ANZSIC 2006 is used to classify the industry of a producer of a given product (industry of origin). For input indexes, ANZSIC 2006 is used to classify the industry of a purchaser of a given product (industry of consumption). Imported products are classified to their equivalent Australian industry of origin.
Products and weights
The key sources of data for upper level weights for the Final demand index are the Australian National Accounts I-O tables.
Price Measurement
The Final demand index is compiled from data used in the PPI industry indexes, the International Trade Price Indexes (ITPIs) and some additional data collections. The indexes are calculated on the index reference period 2011-12 = 100.0.
The valuation basis of transactions in the Final demand index is basic price. However, the use of component series from existing ABS price collections in some cases results in the valuation diverging from this ideal.
Developments
As new PPI industry classification indexes are developed, these may contribute to the broader Final demand index in this publication and associated outputs available on the ABS website.
Mining industries Producer Price Indexes
Introduction
The Output of the Mining industries Producer Price Index (PPI) relates to selected products that are produced by the Oil and gas extraction industry as per ANZSIC 2006 Subdivision 07. The Input to the Coal mining industry index relates to products used by Coal mining as per ANZSIC 2006 Subdivision 06.
In the quarterly PPI publication, Table 36 presents the selected price indexes of the Output of the Mining industries. Presented in this table are: Gas extraction, Domestic; Gas extraction, Domestic, East coast market; and Gas extraction, Domestic, Western Australia. These indexes are a component of the ANZSIC Subdivision 07 – Oil and Gas Extraction.
Table 11 presents the Input to the Coal mining industry price index, as well as quarter-on-quarter and year-on-year percentage changes.
Scope
The scope of the Mining industries PPIs is primarily linked to the principle purpose of the Australian National Accounts, which reflects key economic flows and the structure of the economy. The indexes use the Input-Output (I-O) framework to present a comprehensive picture of the supply (output) and use (input) from and to select areas of the Mining industry.
Classification
Products are classified to their industry of origin according to the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006, and the Input-Output Product Classification (IOPC) tables, where each product is shown according to the industry in which it is primarily produced. The IOPC tables are consistent with ANZSIC 2006 and are identified by an 8 digit code. For output price indexes, ANZSIC 2006 is used to classify the industry of a producer of a given product (industry of origin). For input indexes, ANZSIC 2006 is used to classify the industry of a purchaser of a given product (industry of consumption).
Products and Weights
The weights and products in the Mining industries Producer Price Indexes have been derived from the Australian National Accounts I-O tables, in combination with data from other industry sources.
Price Measurement
The Mining industry PPIs are compiled from data collected through the Survey of Producer Prices and some additional ABS data collections or sources. The Output of the Mining industry index is calculated on the index reference period 2015-16 = 100.0, with the Input to the Coal mining industry index calculated on the index reference period 2011-12 = 100.0.
The valuation basis is basic price for the output indexes and purchasers’ price for the input indexes. Therefore, as far as possible, extraction prices are included in the output indexes and prices for products delivered to the mine site or the primary storage area for a group of mines are reflected in the input index.
Development
Following the significant development of the Australian domestic and export gas industry, the ABS developed and implemented an Output of the Mining industries Producer Price Index. Indexes for the remaining Mining industry subdivisions may be developed in the future based on significance to the Australian economy and need for use within Australian National Accounts compilation. Extensive testing will ensure indexes will be suitable to move from experimental status to production status. At such time these new indexes would contribute to the broader Final demand index in this publication and associated outputs available on the ABS website.
Manufacturing industries Producer Price Indexes
Introduction
The Output of the Manufacturing industries Producer Price Indexes (PPIs) relate to all products that are produced by a specific industry, whereas the Input to the Manufacturing industries PPIs relate to all products used by a specific industry. They are important sources of data for the Final demand index.
In the quarterly publication, Table 12 presents selected price indexes of Output of the Manufacturing industries as well as quarter-on-quarter and year-on-year percentage changes. Table 13 presents selected price indexes for Input to the Manufacturing industries as well as quarter-on-quarter and year-on-year percentage changes.
Scope
The scope of the Manufacturing industries PPIs are primarily linked to the principle purpose of the Australian National Accounts, which reflects key economic flows and the structure of the economy. The indexes use the Input-Output (I-O) framework to present a comprehensive picture of the supply (output) and use (input) from and to select areas of the Manufacturing industry.
Prior to the September quarter 2009, the Manufacturing industries indexes were constructed on a net sector basis and excluded intra-sector transactions. From the September quarter 2009, the Manufacturing industries indexes are constructed on a gross industry basis. The net and gross industry methods are more easily explained by way of an example. The transactions captured for a motor vehicle manufacturing gross industry index would include both the sales of the parts (including sales of parts to other business establishments in the same industry) and the sales of the finished cars – even though the price change of the parts would be included in the price change of the cars. On the other hand, a motor vehicle manufacturing net industry index would measure only the price change of motor vehicles sold to other industries of the economy and would exclude the price change of the parts (sold to business establishments in the same industry) as a separate product.
Classification
Since September quarter 2009 the Manufacturing industries indexes measure changes in the prices of products that are classified as Division C - Manufacturing as per ANZSIC 2006. Outputs of Manufacturing industries indexes include products that are sold or transferred to domestic establishments within or outside the manufacturing industries for further processing, intermediate use, capital equipment use, or export.
Similarly, the Input to the Manufacturing industries indexes measure input purchases or transfers within and outside the industry.
Price Measurement
The Manufacturing industry PPIs are compiled from data collected through the Survey of Producer Prices, other PPI industry classification indexes, the International Trade Price Indexes (ITPIs), and some additional ABS data collections or sources. The indexes are calculated on the index reference period 2011-12 = 100.0.
The valuation basis is basic prices for output indexes and purchasers’ prices for input indexes. Therefore, where possible, factory gate prices exclusive of taxes and transport are used to compile the output indexes. Input indexes are compiled using prices paid by the purchaser, including non-deductible taxes and transport.
Construction industries Producer Price Indexes
Introduction
The Output of the Construction industries Producer Price Indexes relate to outputs of Construction industries as per Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006. The Input to the House construction industry index relates to products as per ANZSIC 2006 Class 3011 – House construction.
In the quarterly publication, Table 17 presents price indexes of the outputs from establishments classified to ANZSIC 2006 Subdivision 30 – Building construction industries, which consist of three classes: Class 3011 – House construction, Class 3019 – Other residential building construction, and Class 3020 – Non-residential building construction. Outputs from ANZSIC 2006 Subdivision 31, which consists of Class 3101 – Road and bridge construction and Class 3109 – Other heavy and civil engineering construction, are also presented in this table. The Output of the Construction indexes are important sources of data for the Final demand index. Table 18 presents the Input to the House construction industry price indexes as well as quarter-on-quarter and year-on-year percentage changes for each of the indexes.
Scope
The scope of the Construction industry PPIs are primarily linked to the principle purpose of the Australian National Accounts, which reflects key economic flows and the structure of the economy.
The Output of House construction PPI measures the price the producer receives from the purchaser, for owner occupier and investor house construction. This price includes grants, rebates, and subsidies received by the purchaser. In contrast, the Consumer Price Index, New dwellings purchased by owner occupiers index, measures the out of pocket cost of the purchaser, excluding grants, rebates, and subsidies received by the purchaser.
The Input to the House construction industry price index measures changes in prices of products (materials) used in house construction, where a house is defined as a detached building predominantly used for long-term residential purposes and consisting of only one dwelling unit. The scope of the index approximates the ANZSIC 2006 Class 3011 – House construction. It does not explicitly cover alterations, additions, renovations and repairs. 'Capital city' relates to the greater capital city statistical area for each state capital city.
Classification
Products are classified to their industry of origin according to the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006, and the Input-Output Product Classification (IOPC) tables, where each product is shown according to the industry in which it is primarily produced. The IOPC tables are consistent with ANZSIC 2006 and are identified by an 8 digit code. For output price indexes, ANZSIC 2006 is used to classify the industry of a producer of a given product (industry of origin). For input price indexes, ANZSIC 2006 is used to classify the industry of a purchaser of a given product (industry of consumption).
Products and weights
To obtain the ANZSIC 06 Division 30 – Building construction indexes at the national level, State and Territory level indexes are aggregated to the national level using proportions based on the value of work done by state and territory and by type of construction, as measured by the Building Approvals, Australia.
The products and weights for the price indexes for ANZSIC 2006 Class 3019 Other residential building construction and 3020 Non-residential building construction are calculated using data from a Bill of quantities, obtained from a quantity surveyor in 2021-22. These quantities are price updated to June 2022 and then proportioned to the state and class level using the Building Approvals, Australia by type of building and state.
The products and weights for the price index of the Input to the House construction industry is calculated using data from a Bill of quantities, obtained from a quantity surveyor in 2019-20. These quantities are price updated to June 2020 and used in combination with the Building Activity, Australia total value work done for houses, by capital city.
Weights for ANZSIC 06 Division 31 – Heavy and civil engineering construction are based on Engineering Construction Activity, Australia.
The ANZSIC 2006 Class 3109 Other heavy and civil engineering construction index is obtained as an aggregate of engineering construction category indexes. It is compiled using prices sourced from existing internal data and indexes. The proportions used in the aggregate are based on the value of work done by state and territory and by construction category, as measured by Engineering Construction Activity, Australia.
The indexes are compiled using prices for work undertaken in each capital city, with capital cities data used as a representation of the whole state or territory. The exception is Queensland, where Other residential building construction and Non-residential building construction also include prices obtained for North Queensland. The weighting pattern for each capital city index will reflect variations in prices for the cities as applied to an Australian average basket of house building materials, with some allowance for city specific building practices e.g. the differing uses of steel and timber materials in Perth and Adelaide compared with the other capital cities.
Price measurement
The Construction industry PPIs are compiled from data collected through the Survey of Producer Prices, other PPI industry classification indexes, the International Trade Price Indexes (ITPIs), and some additional ABS data collections or sources. The indexes are calculated on the index reference period 2011-12 = 100.0.
The valuation basis is basic prices for the output indexes and purchasers’ prices for the input indexes. Therefore, as far as possible, builders’ selling prices are reflected in the output indexes, and prices including delivery to site costs are reflected in the input indexes.
Development
ANZSIC 2006 Subdivision 32 - Construction Services is not currently measured within the Output of Construction industries indexes, with no overall Output of the Construction industry index published as a result.
Services industries Producer Price Indexes
Introduction
The Output of the Services industries indexes measure changes in prices of services from selected industries. Indexes represent the results to date of a program to progressively extend the scope of the Producer Price Indexes (PPIs) into the services industries of the Australian economy. First results from the program were published in March 1999, by way of experimental indexes, in the Information Paper Producer Price Index Developments. Similarly, changes to the indexes published from the September quarter 2009 on the ANZSIC 2006 basis have been documented in the Information Paper Update on ANZSIC 2006 Implementation for Producer and International Trade Price Indexes, Australia. In the quarterly publication, Tables 20-27, 34-35 present index numbers for selected services industries classified to the following ANZSIC 2006 divisions: Accommodation and food services industries, Transport, postal and warehousing industries, Information media and telecommunications industries, Rental, hiring and real estate services industries, Professional, scientific and technical services industries, Administrative and support services industries, Public administration and safety industries, Education and training industries, Health care and social assistance industries and Other services industries.
Scope
The Output of the Services industry PPIs are primarily linked to the principle purpose of the Australian National Accounts, which reflects key economic flows and the structure of the economy.
Classification
Products (goods and services) are classified to their industry of origin according to the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006, and the Input-Output Product Classification (IOPC) tables, where each product is shown according to the industry in which it is primarily produced. The IOPC tables are consistent with ANZSIC 2006 and are identified by an 8 digit code. For the Output of the Services industries price indexes, ANZSIC 2006 is used to classify the industry of a producer of a given product (industry of origin).
Products and weights
In the Outputs of Services industries index, ANZSIC 2006 class indexes are aggregated to the relevant group, subdivision and division using weights derived from the Australian National Accounts: Input-Output Tables, 2018-19 in combination with data from other ABS surveys and industry sources.
Price measurement
The Services industries PPIs are compiled from data collected through the Survey of Producer Prices and some additional ABS data collections or sources. The indexes are calculated on the index reference period 2011-12 = 100.0.
The development of the services industries price collections has involved a wide range of diverse industries with different measurement requirements. Accordingly, extensive consultation with industry associations and individual business establishments has been undertaken to determine the most viable approach on a case-by-case basis. Varying characteristics, and the tendency within many industries to provide unique, one-off services tailored to the needs of individual customers has posed challenges in establishing continuity of pricing to constant quality.
When 'bundling' of a range of different component services within single transactions or contracts occurs, an investigation into feasibility of 'unbundling' is required, meaning obtaining separate prices for each component of the total service. Where this is not feasible, the whole service bundle is priced.
The deregulation of some services industries can lead to structural changes and more complex pricing practices. To address this, samples are continually updated to incorporate new businesses, and pricing methodologies are reviewed over time.
The shifting trend in the use of administrative and transaction data across the ABS Prices Branch has resulted in the utilisation of average unit values (AUVs). The Producer Price Indexes incorporate AUVs as a measure of price change for services industries that are homogeneous and of constant quality.
The valuation basis for each index is basic prices. Prices used in the indexes relate to the prices received by the producer of the service.
Developments
Indexes for the majority of the remaining ANZSIC 2006 Services industries classes are expected to be made available in the future. Extensive testing will ensure indexes will be suitable to move from experimental status to production status. At such time these new indexes may contribute to the broader Final demand index in this publication and associated outputs available on the ABS website.
Retail trade industry Producer Price Indexes
The compilation of the quarterly Producer Price Index for the Output of the Retail trade industry has been paused indefinitely as a result of changing priorities within the ABS due to the COVID-19 pandemic. Data is available for this series up until the December quarter 2019.
Introduction
The Output of the Retail Trade Price Index (RTPI) is a measure of the price of the retail distribution service and is compiled from retail margins data for product groups classified to ANZSIC 2006 Division G Retail Trade. First results were published in November 2013, by way of experimental indexes in the September quarter 2013 issue of this publication.
Scope
The scope of the Retail trade industry PPIs is primarily linked to the principle purpose of the Australian National Accounts, which reflects key economic flows and the structure of the economy.
Classification
Products are classified to their industry of origin according to the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006, and the Input-Output Product Classification (IOPC) tables, where each product is shown according to the industry in which it is primarily produced. The IOPC tables are consistent with ANZSIC 2006 and are identified by an 8 digit code. For the Output of the Retail trade industries price indexes, ANZSIC 2006 is used to classify the industry of a producer of a given product (industry of origin).
Products and weights
The RTPI is compiled from retail margins data for selected unpublished product groups, classified to ANZSIC 2006 Division G Retail Trade with weights updated and indexes chained annually each June quarter.
The weights used in the aggregation stages of the national RTPI are unpublished national Supply and Use Product Classifications (SUPC) retail trade margin shares, obtained from the National Accounts Supply and Use (S-U) tables annually.
Price measurement
Retail trade margins data is collected by the ABS for selected unpublished Supply and Use Product Classifications (SUPC) with the highest contribution to total retail trade margins and where data collection is feasible. A sample of businesses are selected from those classified to ANZSIC 2006 Division G Retail Trade. The Retail Trade Margins Survey (RTMS) collects retail trade data on sales and cost of goods sold (COGS) from primarily large retail businesses. A partial coverage collection approach is used where large businesses represent the retail trade margins of all sizes of retail businesses. Medium sized businesses are included only where industry concentration is not sufficient to exclude them and/or when the retail trade margins of large businesses are not sufficiently representative of those of medium sized businesses. The RTMS excludes small businesses, except where they are a part of a franchise operation. Calculation of the RTPI requires the latest period Consumer Price Index (CPI) data to be available for price updating purposes.
The valuation basis for the index is basic prices. Prices used in the index relate to the prices received by the producer of the product.
Childcare Services Cost Index
Introduction
The Childcare Services Cost Index (CSCI) measures change in prices paid by childcare providers for the goods, services and labour they purchase to provide childcare services to households. The Index measures these costs from the perspective of businesses providing childcare services.
In May 2024, the ABS was funded to develop and publish this index. From December quarter 2024, an Australia level CSCI is published each quarter as a supplement to the Producer Price Indexes (PPI), together with the quarterly and annual percentage change movements in Table 37. More details can be found within Introducing a new Childcare Services Index, released as an information paper together with the September 2024 PPI publication.
The results of the CSCI are used as a guide for determining the annual fee growth limit under the Early Childhood Education and Care Worker Retention Payment program. Under this program, over the two years from December 2024 to November 2026, the Government will fund wage increases for the Early Childhood Education and Care (ECEC) workforce of 15% above the modern award rates. Providers who opt-in to this program must meet a range of conditions, as specified in the Grant Guidelines, including a fee constraint condition limiting annual fee increases.
The CSCI is not used as a source of data for the Final demand index.
Scope
Childcare service providers represented in the Childcare Services Cost Index are businesses classified to the Australian and New Zealand Standard Industrial Classification (ANZSIC) class 8710, Childcare services. This class consists of businesses mainly engaged in providing day care of infants or children, including childcare services, before and/or after school services and childminding services.
The CSCI differs from concepts used in other input PPIs, in that labour costs are included in the CSCI when measuring input price changes, as opposed to other PPIs where labour costs are excluded. Due to these differing concepts, the CSCI cannot be used with PPI aggregate input measures or the Final demand index.
The ABS also publishes an Output price index for childcare services in the PPI publication (Table 35). This index measures changes in prices received by childcare providers for providing childcare services. The price received by childcare providers includes both fees paid by households and any subsidies received by providers.
The Consumer Price Index (CPI) Child care index measures changes in out-of-pocket costs paid by households to childcare providers. Out-of-pocket costs include fees paid net of any subsidies received by households.
Classification
Products (goods and services) are classified to their industry of origin according to the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006, and the Input-Output Product Classification (IOPC) tables, where each product is shown according to the industry in which it is primarily produced. The IOPC tables are consistent with ANZSIC 2006 and are identified by an 8 digit code. Labour costs are classified as compensation of employees within businesses classified to the ANZSIC 2006 Class 8710, Child Care Services.
Products, costs and weights
The structure and weights of the CSCI are based on the 2018-19 ABS Annual Industry Survey (AIS) which included a larger than usual sample for ANZSIC 2006 Health care and social assistance industry division. This data includes detailed financial information for ANZSIC 2006 Class 8710 Child care services, separated into cost categories. These categories are used as the weights for the index structure of the CSCI. For details on how the weights are distributed see the Producer and International Trade Price Indexes: Concepts, Sources and Methods.
The index covers a range of costs representative of those incurred by childcare providers. It includes consumables such as food, nappies and educational materials, and purchased services such as cleaning, accounting and financial services. Costs for rent, lease, and hiring are also included. Labour costs make up a significant proportion of the index and include wages and non-wage components such as superannuation and payroll tax. Increases in wages funded by the Government through the Early Childhood Education and Care Worker Retention Payment program will be treated as a reduction in costs for providers and will therefore be deducted from the associated wage increases.
Weights enable price changes for diverse products to be combined. The weights for the CSCI represent the average proportions of total expenditure for goods, services and labour paid by childcare providers. Larger sectors in the industry, like centre-based childcare, make up a higher proportion of industry-wide expenditure and therefore weighting proportions align more closely with those sectors’ expenditure patterns than they do other parts of the industry. Price movements for items with higher weights have a correspondingly larger impact on the overall index than price movements for items with lower weights. As the index is designed to represent the entire industry, results may not reflect the experience of individual businesses or sectors.
Price measurement
The CSCI is compiled from data collected through the Wage Price Index (WPI), Producer Price Index (PPI), and Consumer Price Index (CPI). The indexes are calculated on the index reference period 2018-2019 = 100.0.
The valuation basis is purchasers’ prices for the cost index.
Using the indexes
Analysis of index numbers
Care should be exercised when interpreting quarter-to-quarter movements in the indexes as short-term movements do not necessarily indicate changes in trend.
Movements in indexes from one period to another can be expressed either as changes in index points or as percentage changes. The following example illustrates the method of calculating index points changes and percentage changes between any two periods:
Final demand index numbers
September quarter 2024 131.9 (see Table 1)
less September quarter 2023 127.0 (see Table 1)
Change in index points 4.9
Percentage change 4.9/127.0 X 100 = 3.9% (see Table 1)
The data cube for Final demand (Table 5) provides analyses of the index points contribution of select ANZSIC groups towards the Final demand index. For example, Petroleum refining and petroleum fuel manufacturing contributed 1.04 index points to the Final demand index number of 131.9 for the September quarter 2024 and -0.11 index points to the net change of 1.2 index points between the June 2024 and September 2024 quarters.
For more information, watch our data literacy presentation on CPI, inflation and cost of living data as well as our ABS data crash course, designed especially for journalists to learn how to find, download and interpret our data.
Rounding
Published index numbers are rounded to one decimal place. Percentage change movements are calculated from the index numbers and then rounded to one decimal place. Rounding errors can occur, causing discrepancies (e.g. when calculating percentage changes of aggregates and their components).
Index reference periods
All index numbers are calculated on the index reference period 2011-12 = 100.0, exceptions are listed below. Exceptions are due to the introduction of new indexes at a later date than the original reference period.
- Selected series in Table 35 - Output of the Health care and social assistance industries, group and class index numbers are calculated on an index reference period of 2012-13 = 100.0
- Selected series in Table 27 - Output of the Other services industries, group and class index numbers are calculated on an index reference period of 2015-16 = 100.0
- Table 36 - Output of the Mining industries are calculated on an index reference period of 2015-16 = 100.0
- Table 37 - Childcare Services Cost Index is calculated on an index reference period of 2018-2019 = 100.0
Revisions to indexes
Index numbers are released as final figures at the time they are first published. Revisions will only occur in exceptional circumstances.
Enquiries
For enquiries about these and related statistics, contact the Customer Assistance Service via the ABS website Contact Us page. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.
History of changes
History of changes
Further information on price index developments in the ABS is presented in the following publications:
December 2024, Introduction of Childcare Services Cost Index
March 2024, Review of Final demand and resulting changes to published components
June 2022, updated Producer and International Trade Price Indexes, Concepts, Sources and Methods
March 2020, indefinite pause of RTPI
December 2019, PPI Stage of Production (SOP) Review and the resulting changes
September 2017, Inclusion of the Output of Mining industries index
September 2015, implementation of new weighting patterns
September 2013, discontinued series
September 2012, review of the Producer and International Trade Price Indexes
- Information Paper: Review of the Producer and International Trade Price Indexes, 2011
- Information Paper: Outcome of the Review of the Producer and International Trade Price Indexes
- Information Paper: Implementation of the Review of the Producer and International Trade Price Indexes
September 2009, updates to industry classifications through implementation of ANZSIC 2006
- Information Paper: Update on ANZSIC 2006 Implementation
- Information Paper: Update on ANZSIC 2006 Implementation for Producer and International Trade Price Indexes, Australia, 2009
- Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006
March 2006, changes to time series spreadsheets
2000, new tax system, affecting all Price indexes
Related articles
For more articles related to economic statistics see the ABS articles archive
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June 2024, Insights into Australian Exports of Meat
March 2023, Intermediate Use and Output Ratios in the Australian Economy
December 2020, Insights into Australian industries
October 2019, Services in the Australian economy
December 2016, Residential ABS liaison - Residential construction
Abbreviations
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ABS | Australian Bureau of Statistics |
AIS | Australian Industry Survey |
ANZSIC | Australian and New Zealand Standard Industrial Classification |
AUV | Average Unit Value |
COGS | Cost Of Goods Sold |
CPI | Consumer Price Index |
CSCI | Childcare Services Cost Index |
ECEC | Early Childhood Education and Care |
GDP | Gross Domestic Product |
GST | Goods and Services Tax |
ITPI | International Trade Price Index |
IMF | International Monetary Fund |
I-O | Input-Output |
IOPC | Input-Output Product Classification |
OECD | Organisation for Economic Co-operation and Development |
PPI | Producer Price Index |
RTMS | Retail Trade Margins Survey |
RTPI | Retail Trade Price Index |
SOP | Stage of Production |
SUPC | Supply and Use Product Classification |
WPI | Wage Price Index |