Producer Price Indexes, Australia

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Contains a range of producer price indexes in the Australian economy, comprising mining, manufacturing, construction and services industries.

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Reference period
June 2023
Released
28/07/2023
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Key statistics

Final demand (excluding exports)

  • Rose 0.5% this quarter.

  • Rose 3.9% over the past twelve months.

What are the Producer Price Indexes (PPIs)?

The Australian PPIs 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. Whereas other measures, such as the Consumer Price Index (CPI), measure price change from the consumers perspective.

What is Final demand?

Final demand measures the price change of products (goods and services) consumed with no further processing. For example, sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn raw sugar is an intermediate product which is then used to produce the final product, refined sugar. Final demand captures final products destined for final consumption, with no further processing.

Illustrated below are two examples for the three stages: preliminary, intermediate, and final for sugar and bread.

Example of Final demand: sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn raw sugar is an intermediate product which is then used to produce the final product, refined sugar. Final Demand captures final products destined for final consumption, with no further processing.
This image illustrates two examples for the three stages: preliminary products, intermediate products, and final products: 1. Sugar cane is a preliminary product and used as an input into the production of raw sugar. In turn raw sugar is an intermediate product which is then used to produce the final product, refined sugar. 2. Wheat is a preliminary product and used as an input into the production of flour. In turn flour is an intermediate product which is then used to produce the final product, bread.

Changes in this issue

The June quarter 2023 issue contains revisions to March quarter 2023 in the following indexes:

  • Final demand.
  • Inputs to the manufacturing industries.
  • Heavy and civil engineering construction.

Revised figures for March are included in Time series spreadsheets (Tables 1, 13, 14, 17) and Data cubes (Tables 5 and 28). 

The June quarter 2023 issue of the Producer Price Indexes includes the re-weighted price index for Input to coal mining.

Quarterly overview

Prices in Final demand increased 0.5% this quarter, the lowest quarterly growth since March 2021. While price increases have largely moderated, the Construction industry continues to drive growth in Final demand.

 Mar Qtr 23 to Jun Qtr 23Jun Qtr 22 to Jun Qtr 23
Final demand

% change

% change

Final demand (excl. exports)0.53.9

Index reference period: 2011-12 - 100.0.

The main contributors to quarterly growth in Final demand were:

  • Output of building construction (+0.9%), due to ongoing skilled labour shortages and the passing through of manufacturing costs from energy intensive materials. 

  • Heavy and civil engineering construction (+0.8%), due to ongoing skilled labour shortages and the passing through of recent price increases for electricity and freight.

  • Cafes, restaurants and takeaway food services (+1.7%), due to increased input and operational costs.

Offsetting the rise were price falls in:

  • Accommodation (-10.7%), due to usual seasonal falls following the peak holiday period, and reduced discretionary spending.

  • Motor vehicle and motor vehicle part manufacturing (-2.8%), due to price cuts in some luxury and high-end vehicles.

  • Petroleum refining and petroleum fuel manufacturing (-4.2%), due to a fall in global crude oil prices and high global fuel production.

Rounding

Any discrepancies between totals and sums of components in this publication are due to rounding.

Construction

Input to the house construction industry

Input prices to the house construction industry rose 0.6%

Input prices to house construction increased 0.6% in the June quarter 2023, the lowest quarterly rise since December 2020. The increase was driven by energy intensive materials such as plaster, concrete, and sanitaryware products as suppliers passed through the increased energy and freight costs from recent quarters.

While prices continued to rise, growth has eased for the fourth consecutive quarter as supply chains improved and falling demand for new construction allowed builders to work through the backlog of housing.

Over the past twelve months, Input prices to house construction rose 7.4%.

In building materials, the main contributors were:

  • Other materials (+2.0%), driven by plaster products (+4.8%).
  • Concrete, cement and sand (+1.9%), driven by ready mixed concrete (+2.1%).
  • Plumbing products (+1.1%), driven by ceramic sanitaryware (+3.3%).

These rises were driven by higher energy costs at the manufacturing stage and increased freight costs being passed on by suppliers.  

Offsetting the rise was a price fall in:

  • Steel products (-5.4%), driven by steel beams and sections (-7.8%), due to improved supply conditions and falling demand for new housing.

Capital city price movements (Territory prices are not sampled):

  • Sydney (+0.3%), driven by Cement products (+6.0%).
  • Melbourne (+0.6%), driven by Other materials (+2.7%).
  • Brisbane (+1.4%), driven by Other materials (+4.2%).
  • Adelaide (+1.0%), driven by Other materials (+2.5%).
  • Perth (-0.3%), driven by Other materials (-2.6%).
  • Hobart (+0.8%), driven by Other materials (+5.6%).

Other materials include plaster products, mirrors and other glass, insulation, and waterproofing.

Output of the construction industry

Output prices of the construction industries

Building construction prices rose 1.0% this quarter and 6.5% over the past twelve months.

Growth in the Output of the construction industries continued to be driven by labour shortages, with demand for tradespeople resulting in upward pressure on output costs. While material prices have stabilised, increased prices for concrete based structural components and internal fittings continued to rise. Demand for materials and labour remained high due to the ongoing activity in the non-residential market, as well as the residential and infrastructure sectors.

The contributors to the quarterly price movements were:

  • House construction (+1.0%).
  • Other residential building construction (+0.9%).
  • Non-residential construction (+0.9%).

House construction prices rose 1.0%

House construction prices rose this quarter, driven by increases in Victoria and New South Wales. Interest in the market remained subdued, due to ongoing high interest rates, construction costs, and housing affordability concerns. Labour shortages for finishing trades and the resulting cost escalations drove price rises this quarter. Falls in Western Australia partially offset the rise this quarter, due to builders increasing bonus offers to remain competitive.

Over the past twelve months, House construction prices rose 7.3%.

Other residential building construction prices rose 0.9%

Other residential building construction prices rose this quarter, driven by growth in New South Wales and Queensland. Labour shortages and competition between construction sectors for skilled tradespeople drove prices this quarter, placing upward pressure on project costs. High prices for concrete based structural components and internal fittings continued to place pressure on the sector this quarter due to increased demand, high manufacturing costs, and labour shortages.

Over the past twelve months, Other residential building construction prices rose 5.9%. 

Non-residential building construction prices rose 0.9%

Non-residential building construction prices rose this quarter, driven by increased prices for concrete based materials due to strong demand and high manufacturing costs. Ongoing high demand for skilled trades also contributed, placing upward pressure on project costs. The pipeline of work in the non-residential market, coupled with ongoing pressure from the residential, and infrastructure sectors, placed further demand on resources.

Over the past twelve months, Non-residential building construction prices rose 6.1%.

Heavy and civil engineering construction prices rose 0.9%

  • Other heavy and civil engineering construction prices rose due to cost rises for concrete, as recent high energy prices flowed through to manufacturing costs. Recent high diesel prices also increased transport and machine operating costs.

  • Road and bridge construction prices rose due to increased costs for concrete and aggregate, driven by recent energy prices increasing manufacturing costs.

Heavy and civil engineering construction prices rose 5.4% over the past twelve months.

Mining industries

Input to the coal mining industry

Input to the coal mining industry rose 0.4%

The main contributors were:

  • Machine and equipment manufacturing, due to higher input costs, including labour, utilities, raw materials and freight.
  • Electricity supply, due to higher prices in contract renewals resulting from wholesale energy price increases.

This movement was partially offset by:

  • Petroleum and coal product manufacturing, due to decreased diesel prices.

Over the past twelve months, Input to the coal mining industry prices rose 4.4%.

Output of the mining industry

Gas extraction, domestic rose 4.1%

Prices received for Gas extraction, domestic rose 4.1%, due to increased demand coming into winter, coupled with lower gas production.

The quarterly price rise for Gas extraction, domestic comprised of:

  • East coast production (+4.8%).
  • West coast production (+1.3%).

Over the past twelve months Gas extraction, domestic rose 6.0%.

East Coast represents domestic gas extraction in Queensland, New South Wales, Victoria, and South Australia while West Coast represents domestic gas extraction in Western Australia.

Manufacturing

Input to the manufacturing industry

Input prices to manufacturing fell 0.2%

Input prices to manufacturing fell 0.2% over the quarter and rose 0.7% over the past twelve months. Prices continued to fall following the historical increases across inputs to manufacturing in recent years.

The main contributors to input price falls to the manufacturing industries were:

  • Basic chemical and chemical products (-6.7%), due to a fall in the price of potassium chloride coming off historically high prices.
  • Agriculture to manufacturing (-2.0%), due to a fall in the price of beef following an increase in cattle slaughter rates as more supply became available.
  • Primary metal and metal products (-2.9%), due to a fall in global construction activity leading to a fall in demand for iron and steel products.

Offsetting the fall, were price rises in:

  • Metal ore mining (+2.7%), due to investor demand for gold continuing to rise amid high inflation and broader economic uncertainty attracting more safe-haven investments.
  • Transport equipment (+11.8%), due to rising input costs of parts.
  • Forestry and logging (+5.6%), due to a rise in domestic freight costs, and annual price increases for logs.

Output of the manufacturing industry

Output prices of the manufacturing industries rose 0.6%

Output of the manufacturing industries rose 0.6% over the June quarter and 1.5% over the past twelve months. While prices have increased across Outputs of the manufacturing industry, these rises have moderated significantly in recent quarters.

 

The main contributors to output price rises of the manufacturing industries were:

  • Other basic non-ferrous metal manufacturing (+5.8%), due to investor demand for gold continuing to rise as high inflation and broader economic uncertainty drove more safe-haven investments.
  • Alumina production (+3.9%), due to increased demand for aluminium production.
  • Other food product manufacturing (+3.9%), due to low global coffee bean supply leading to an increase in the price of coffee products.

Offsetting the rise were price falls in:

  • Petroleum refining and petroleum fuel manufacturing (-7.5%), due to a fall in diesel prices in line with decreasing global crude oil prices.
  • Structural steel fabrication (-6.3%), due to a fall in demand for steel products amid easing construction activity.
  • Meat processing (-1.6%), due to a fall in the price of beef following an increase in cattle slaughter rates as more supply became available.

Services

Output of the services industries

Accommodation and food services prices fell, driven by:

  • Accommodation services (-11.4%), due to falling demand after the summer peak holiday period, reduced discretionary spending, and domestic travellers substituting overseas and interstate holidays for intrastate holidays.

This was partially offset by:

  • Cafes, restaurants, and takeaway food services (+1.8%), due to higher input and operating costs.

Over the past twelve months:

  • Accommodation services prices rose 1.3%.

  • Cafes, restaurants, and takeaway food services prices rose 5.5%.

 

Transport, postal and warehousing services

Transport, postal and warehousing prices fell due to the pass through of falling fuel prices and reduced supply chain disruptions after flood impacts in previous quarters. Price falls were recorded in:

  • Road freight transport (-1.8%),
  • Postal and courier pick-up and delivery (-2.9%)
  • Rail freight transport (-3.5%).

This was partially offset by:

  • Airport operations and other air transport support (+1.6%), due to a pass through of price increases absorbed during the pandemic.

Over the past twelve months:

  • Road freight transport prices rose 4.3%.
  • Postal and courier pick-up and delivery prices rose 0.9%.
  • Rail freight transport prices rose 4.2%.
  • Airport operations and other air transport support prices fell -1.2%.

 

 

Rental, hiring and real estate services prices rose, driven by:

  • Non-residential property operators (+1.6%), due to further rises in industrial rents as demand for warehouses and distribution centres continued to outpace supply.
  • Other goods and equipment rental and hiring (+0.5%), due to labour shortages amid strong building and infrastructure project demand, and rising costs for parts and maintenance.

This was partially offset by:

  • Motor vehicle and transport equipment rental and hiring (-5.7%), driven by a reduction in car hire rates and excess fleet size capacity.
  • Real estate services (-0.6%), due to lower advertised property levels and increased service competition.

Over the past twelve months:

  • Non-residential property operators prices rose 8.6%.
  • Other goods and equipment rental and hiring prices rose 3.5%.
  • Motor vehicle and transport equipment rental and hiring prices fell -11.0%.
  • Real estate services prices fell -2.4%.

 

Professional, scientific, and technical services prices rose, driven by:

  • Architectural, engineering and technical services (+0.7%), due to demand related to a backlog of infrastructure projects and ongoing skilled labour supply constraints.

  • Legal and accounting services (+0.8%), due to shortages of qualified labour, and wage reviews.

Over the past twelve months:

  • Architectural, engineering and technical services prices rose 2.6%

  • Legal and accounting services prices rose 3.6%.

Data downloads

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Time series

Data files
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Datacubes

Data files

  • Table 5 Final demand: contribution to final demand index by industry - index points

    Download xlsx [27.88 KB]

  • Table 28 Contribution to input to the manufacturing industries index, subdivision and index points

    Download xlsx [26.88 KB]

  • Table 29 Contribution to output of the manufacturing industries index, group and index points

    Download xlsx [23.72 KB]

  • Table 30 Contribution to input to the house construction industry index, weighted average of six state capital cities, index points

    Download xlsx [23.42 KB]

Data Explorer datasets

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For more information about Data Explorer, see the Data Explorer user guide.

Final demand

Final Demand, index numbers and percentage changes

Construction

Input to the house construction industry

Input to the House construction industry index, weighted average of six state capital cities, index numbers and index points 

Output of the construction industry

Output of the Construction industries, subdivision and class index numbers 

Mining industries

Input to the coal mining industry

Input to the Coal mining industry, index number and percentage changes

Output of the mining industry

Output of the Mining industries, index numbers

Manufacturing

Input to the manufacturing industry

Input to the Manufacturing industries, index numbers

Contribution to Input of the Manufacturing industries index, subdivision and index points 

Output of the manufacturing industry

Output of the Food manufacturing industries, subdivision, group and class index numbers

Output of the Beverage and tobacco product manufacturing industries, subdivision, group and class index numbers

Output of the Textile, leather, clothing and footwear manufacturing industries, subdivision, group and class index numbers

Output of the Wood product manufacturing industries, subdivision, group and class index numbers

Output of the Pulp, paper and converted paper product manufacturing industries, subdivision, group and class index numbers

Output of the Printing (including the reproduction of recorded media) industries, subdivision, group and class index numbers

Output of the Petroleum and coal product manufacturing industries, subdivision, group and class index numbers

Output of the Basic chemical and chemical product manufacturing industries, subdivision, group and class index numbers

Output of the Polymer product and rubber product manufacturing industries, subdivision, group and class index numbers

Output of the Non-metallic mineral product manufacturing industries, subdivision, group and class index numbers

Output of the Primary metal and metal product manufacturing industries, subdivision, group and class index numbers

Output of the Fabricated metal product manufacturing industries, subdivision, group and class index numbers

Output of the Transport equipment manufacturing industries, subdivision, group and class index numbers

Output of the Machinery and equipment manufacturing industries, subdivision, group and class index numbers

Output of the Furniture and other manufacturing industries, subdivision, group and class index numbers

Contribution to Output to the Manufacturing industries index, group index points 

Services

Selected Output of the Service industries, index numbers

Previous catalogue number

This release previously used catalogue number 6427.0.

Using price indexes

Price indexes in contracts

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).

Use of Price Indexes in Contracts sets out a range of issues that should be taken into account by parties considering including an Indexation Clause in a contract using an ABS published price index.

Changes in this release

The June quarter 2023 issue contains revisions to March quarter 2023 in the following indexes:

  • Final demand.
  • Inputs to the manufacturing industries.
  • Heavy and civil engineering construction.

Revised figures for March are included in Time series spreadsheets (Tables 1, 13, 14, 17) and Data cubes (Tables 5 and 28). 

The June quarter 2023 issue of the Producer Price Indexes includes the re-weighted price index for Input to coal mining.

This issue includes the following changes in the Time series spreadsheets:

  • 'Table 13. Input to the Manufacturing industries, division and selected industries, index numbers and percentage changes' has been renamed 'Table 13. Inputs from selected Subdivisions and Groups to the Manufacturing Division, index numbers and percentage changes'.
  • Series ID A2309057L, 'Agriculture' has been renamed 'Agriculture to Manufacturing'.

Methodology

Producer Price Indexes, Australia methodology, June 2023