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
March 2022
Released
29/04/2022
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Key statistics

Final demand (excluding exports)

  • Rose 1.6% this quarter.
  • Rose 4.9% 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.

Producer Price Index (PPIs) weight update, 2022

As advertised in the December quarter publication, a number of the PPIs have been reweighted for the March quarter 2022. Indexes are reweighted using ABS Australian National Accounts - Input Output (I-O) Tables. For more information please refer to Changes in this release. 

Quarterly overview

 Dec Qtr 21 to Mar Qtr 22Mar Qtr 21 to Mar Qtr 22
Final demand

% change

% change

Final demand (excl. exports)1.64.9

Index reference period: 2011-12 - 100.0.

The main contributors to quarterly growth in Final demand were:

  • Output of building construction (+3.0%), driven by increases for materials with supply constraints for timber and metals, high freight costs and skilled trade shortages.
  • Petroleum refining and petroleum fuel manufacturing (+17.6%), due to a rise in global crude oil prices and OPEC+ countries falling short of agreed production increases.
  • Heavy and civil engineering construction (+2.4%), due to increases in steel, crude oil and skilled trade shortages, along with ongoing increases in infrastructure investment.

The annual rise of 4.9% in Final demand to March 2022 is the strongest increase since December 2008.

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 4.2%

Input prices to house construction rose due to ongoing demand in residential construction and increases in material prices. Domestic and global supply remains tight with shipping delays and high international freight costs. Ongoing shortages of timber and increasing metals prices have placed added upward pressure on material costs.

Over the past twelve months, Input prices to house construction rose 15.4%, due to; Timber, board and joinery (+20.6%) and Other metal products (+16.2%).

Input prices to house construction rose in line with rising costs and increased demand for building materials. The main contributors were:

  • Timber, board and joinery (+4.0%), driven by plywood and board (+11.0%), due to continuing strong demand and ongoing supply chain disruptions adding upward pressure on freight costs.
  • Other metal products (+4.0%), driven by aluminium windows and doors (+4.5%), due to increased input costs in aluminium and glass, reduced production and continued strong global demand.
  • Other materials (+4.6%), driven by carpet and floor covering (+8.7%), due to price rises in wool and PVC as a result of raw material price rises and supply shortages.

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

  • Sydney (+3.6%), driven by Other materials (+6.0%).
  • Melbourne (+4.6%), driven by Other metal products (+4.5%).
  • Brisbane (+3.7%), driven by Other metal products (+4.9%).
  • Adelaide (+3.5%), driven by Timber, board and joinery (+4.7%).
  • Perth (+4.8%), driven by Ceramic products (+14.4%).
  • Hobart (+4.2%), driven by Timber, board and joinery (+5.6%).

Output of the construction industry

Output prices of the construction industries

Building construction prices rose 2.9% this quarter and 10.1% over the past twelve months. This is the largest annual increase since the series began.

Strong activity in the residential sector coupled with ongoing public and private investment in infrastructure projects driving demand for trades and materials. The increased demand for the tightening supply of resources is placing upward pressure on prices across all construction sectors this quarter.

The quarterly price movements by class were:

  • House construction (+4.9%).
  • Other residential building construction (+1.8%).
  • Non-residential construction (+2.0%).

House construction prices rose 4.9%

House construction prices rose, driven by supply constraints for timber and metals, and higher freight costs. Skilled trade shortages continue to place upward pressure on labour prices. Western Australia recorded it’s strongest rise since the start of the series as builders reduce bonus offers and raise base prices.

Over the past twelve months House construction prices rose 15.0%.

Other residential building construction prices rose 1.8%

Other residential construction prices recorded increases for all states driven by price rises for materials and labour. Ongoing public and private investment across construction has tightened the supply of tradespeople and placed further pressure on costs. The ongoing disruptions to international freight has driven the increase in prices for materials.

Over the past twelve months Other residential building construction prices rose 7.1%.

Non-residential construction prices rose 2.0%

Non-residential construction prices recorded a rise across all states with strong increases recorded for New South Wales, Victoria, Queensland and South Australia. Price rises have been driven by increased material costs for steel, concrete and reinforcement. The rise in project tendering in Victoria and South Australia during the December quarter 2021 has strengthened the market and placed upward pressure on existing labour shortages.

Over the past twelve months Non-residential building construction prices rose 8.1%.

Heavy and civil engineering construction prices rose 2.3%

  • Other and civil engineering construction prices rose, due to rising costs for steel driven by increased freight prices, production disruptions and raw material cost increases. 
  • Road and bridge construction prices rose due to increased costs for steel and crude oil, driven by disruptions in both production and supply chain restrictions, and strong global demand pushing prices in an upward trend.

Heavy and Civil engineering construction prices rose 7.8% over the past twelve months.

Mining industries

Input to the coal mining industry

Input prices to the coal mining industry rose 1.7%, due to:

  • Primary metal and metal product manufacturing, due to increased raw material prices, tightened supply and rising import costs.
  • Petroleum and coal product manufacturing, driven by a rise in oil prices due to limited supply and increased global demand for diesel.

Over the past twelve months Input to the coal mining industry prices rose 9.1%.

Output of the mining industry

Prices received for Gas extraction, domestic rose 9.3%, due to rises in contract prices, global crude oil and LNG spot prices. Over the past twelve months Gas extraction, domestic rose 31.9%.

East coast gas extraction prices increased significantly, while West coast gas extraction prices increased slightly in March quarter 2022

Domestic gas extraction quarterly price change
This map shows Domestic gas extraction quarterly price change. West coast rose 0.4% Prices for Western Australia domestic gas extraction increased slightly over the quarter. The small price increase reflects that domestic supply is sufficient to meet demand. East coast rose 11.6% Prices for East coast domestic gas extraction rose over the quarter. The price increase is driven by international crude and LNG markets, and escalation of contract prices.

Manufacturing

Input to the manufacturing industry

Input prices to the manufacturing industries rose 6.2%

Input prices to manufacturing rose 6.2% over the quarter and rose 18.5% over the past twelve months.

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

  • Oil and gas extraction (+25.6%), due to a rise in crude oil prices as global demand increases amid reduced oil production and supply disruptions from the Russia – Ukraine conflict.
  • Metal ore mining to manufacturing (+7.0%), due to increased demand for gold in response to high U.S. inflation, and broader economic uncertainty.
  • Basic chemical and chemical product (+13.9%), due to reduced global supply of caustic soda and ammonium nitrate, and higher energy costs amid strong global demand.
  • Agriculture to manufacturing (+2.4%), due to reduced availability of beef cattle for consumption as farmers focus on herd rebuilding following recent rainfall.

There were no significant movements offsetting the input price rises.

Output of the manufacturing industry

Output prices of the manufacturing industries rose 4.1%

Output prices of the manufacturing industries rose 4.1% over the quarter and 15.1% over the past twelve months.

The main contributors to Output price rises to the manufacturing industries were:

  • Petroleum refining and petroleum fuel manufacturing (+20.7%), due to increased global crude oil prices as transportation demand for fuel recovered under easing COVID restrictions and re-opening of international borders.
  • Other basic non-ferrous metal manufacturing (+5.2%), due to increased demand for investment in response to high U.S. inflation, and broader economic uncertainty.
  • Meat processing manufacturing (+3.7%), due to reduced availability of processed beef from herd re-building, and labour shortages due to COVID and flooding causing additional supply disruptions.

Offsetting the rise, was a price fall in:

  • Alumina production (-8.3%), coming off a strong increase in the December quarter. The fall this quarter was due to increased global supply and expected increases in refining capacity in the Pacific region.

Services

Output of the services industries

Accommodation and food services prices rose, driven by: 

  • Accommodation services (+2.8%), due to seasonal holiday demand and easing of state travel restrictions.
  • Cafes, restaurants, and takeaway food services (+1.1%), due to restaurants and cafes reviewing their prices to reflect higher input costs.

Over the past twelve months:

  • Accommodation services prices rose 10.8%.
  • Cafes, restaurant and takeaway food services prices rose 4.1%.

Transport, postal and warehousing prices rose, driven by:

  • Road freight transport (+1.6%), due to rising costs for fuel and wages.
  • Postal and courier pick-up and delivery services (+1.8%), due to rising fuel costs.

This was partly offset by:

  • Water transport support services (-3.7%), due to falls in annual fees and easing in port congestion and processing delays.

Over the past twelve months:

  • Road freight transport prices rose 5.2%.
  • Postal and courier pick-up and delivery services rose 4.7%.
  • Water transport support services fell 2.7%.

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

  • Non-residential property operators (+1.5%), due to a rise in industrial rents resulting from increased demand for industrial spaces, storage of e-commerce goods and accommodating employees. Offsetting this rise are falls in retail rents.
  • Real estate services (+4.2%), due to continued growth in the housing market.
  • Passenger car rental and hiring (+16.2%), due to seasonal holiday demand and easing of state travel restrictions.

Over the past twelve months:

  • Non-residential property operators rose 2.7%.
  • Real estate services prices rose 12.9%.
  • Passenger car rental and hiring prices rose 20.6%.

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

  • Management advice and related services (+1.3%), due to increased wages.
  • Engineering design and consulting services (+0.4%), due to high demand from the construction industry and rising costs.

Over the past twelve months:

  • Management advice and related services prices rose 3.9%.
  • Engineering design and consulting services prices rose 5.0%.

Higher Education in Education and Training services industries rose, driven by: 

  • Higher education, exports (+4.3%), due to the opening of international borders and fee increases across a number of universities.

Health care and social assistance industries rose, driven by: 

  • Child care services (+2.1%), due to calendar year fee increases and increased costs to child care providers.

Over the past twelve months Child care services rose 6.1%.

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 [27.7 KB]

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

    Download xlsx [26.73 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 [23.44 KB]

Data Explorer datasets

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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

Producer Price Index (PPIs) weight update, 2022

As advertised in the December quarter publication, the PPIs have been reweighted for the March quarter 2022. Indexes are reweighted using ABS Australian National Accounts - Input Output (I-O) Tables. Weights represent the structure of the Australian economy and determine which prices have the greatest contribution to the PPIs. 


From March quarter 2022, the weights of Final demand, Input to the Manufacturing, Output of the Manufacturing, Output of the Services, and Output of the mining indexes, have been updated in line with the 2018/19 Australian National Accounts: Input-Output tables. Additionally, index structures have been updated in accordance with changes in I-O classifications. As a consequence of the re-weight, the points contribution data for the December quarter 2021 shown in tables 5, 28 and 29 have been updated from those published in the previous issue of this publication.

See the full history of changes.

Additional information

The compilation of the quarterly Producer Price Index for the Output of the Retail Trade Industry, normally released as an additional update of the Producer Price Indexes, Australia (ABS cat. No. 6427.0), has been paused indefinitely as a result of changing priorities within the ABS as a result of the COVID-19 pandemic.

Methodology

Producer Price Indexes, Australia methodology, March 2022