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 2023
Released
28/04/2023
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Key statistics

Final demand (excluding exports)

  • Rose 1.0% this quarter.
  • Rose 5.2% 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.

Post Release Changes

The March quarter 2023 Final demand, Inputs to manufacturing, and Heavy and civil engineering indexes have been revised since their release in this publication.

The updated March quarter 2023 indexes are included in Producer Price Indexes publications from the June quarter 2023 onwards. Revised figures for March can be found in Time series spreadsheets (Tables 1, 13, 14, 17) and Data cubes (Tables 5 and 28). 

Changes in future issues

The review of the Input to mining PPI has been postponed to June quarter 2023. This will consist of an update of the weights for the Input to mining index.

From the June quarter 2023, the following changes will be included in the Time series spreadsheets:

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

Quarterly overview

Electricity and gas supply, and the Construction industry drove the increase in Final demand this quarter.

 Dec Qtr 22 to Mar Qtr 23Mar Qtr 22 to Mar Qtr 23
Final demand

% change

% change

Final demand (excl. exports)1.05.2

Index reference period: 2011-12 - 100.0.

The main contributors to quarterly growth in Final demand were:

  • Electricity and gas supply (+13.3%), due to long term contract renewals reflecting the recent higher prices caused by supply disruptions.
  • Output of building construction (+1.1%), due to continued demand in other and non-residential construction, ongoing skilled labour shortages and costs for materials.
  • Education and training services (+3.7%), due to tertiary education course fee increases.

Offsetting the rise were price falls in:

  • Petroleum refining and petroleum fuel manufacturing (-7.2%), due to a fall in global crude oil prices and high global fuel production.
  • Furniture and other manufacturing (-5.8%), due to reduced steel and timber prices, and lower shipping costs combined with exchange rate impacts.
  • Computer and electronic equipment manufacturing (-3.5%), due to lower shipping costs combined with exchange rate impacts.

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 1.6%

Input prices to house construction increased 1.6% in the March quarter 2023, due to price rises in plasterboard, aluminium, glass and copper materials, primarily driven by high energy and transport costs. The rate of price rises has eased in recent quarters, following the historically high increases throughout 2022, as the supply of building materials improved due to increased domestic production and imports to meet demand. However, demand for materials remains high due to the volume of work already in the pipeline.

Over the past twelve months, Input prices to house construction rose 11.4%.

Building material prices rose due to increased energy, labour and raw material costs. The main contributors were:

  • Other materials (+2.8%), driven by plaster products (+5.2%), due to increased energy and gas costs, coupled with transport costs.
  • Other metal products (+1.7%), driven by aluminium windows and doors (+2.6%), due to higher costs for aluminium, glass, transport, and labour.
  • Electrical equipment (+3.9%), driven by electric cable and conduit (+6.0%), due to increased costs for copper and PVC, coupled with higher transport costs.

Offsetting the rise, were price falls in:

  • Steel products (-4.4%), driven by steel beams and sections (-6.4%), due to improved supply conditions.

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

  • Sydney (+1.9%), driven by Other materials (+4.8%).
  • Melbourne (+1.1%), driven by Other metal products (+1.4%).
  • Brisbane (+0.9%), driven by Other materials (+1.7%).
  • Adelaide (+1.2%), driven by Other materials (+2.4%).
  • Perth (+3.6%), driven by Ceramic products (+18.4%).
  • Hobart (+0.6%), driven by Electrical equipment (+2.5%).

Output of the construction industry

Output prices of the construction industries

Building construction prices rose 1.1% this quarter and 9.4% over the past twelve months. While price increases continued to ease from the peak in June quarter 2022, this quarter’s rise remains stronger than those typically seen prior to March quarter 2021.

Shortages of skilled and unskilled labour, in addition to material price increases for structural components and internal fixings, continued to drive growth in the Output of construction industries this quarter. Ongoing activity across the construction industry continued to place pressure on demand for materials and labour.

The quarterly price movements by class were:

  • House construction (+0.8%).
  • Other residential building construction (+1.2%).
  • Non-residential construction (+1.3%).

House construction prices rose 0.8%

The House construction price rise was driven by increases in New South Wales, South Australia and the Australian Capital Territory. Labour shortages and higher wage costs were the main drivers for increases as material prices stabilised. Falls in Victoria and Queensland partially offset the rise this quarter due to builders increasing bonus offers to remain competitive. Increased interest rates and construction costs have resulted in subdued interest in the market.

Over the past twelve months, House construction prices rose 12.6%.

Other residential building construction prices rose 1.2%

Growth in Other residential construction prices was driven by New South Wales, Queensland and South Australia. Ongoing labour shortages for skilled trades placed upward pressure on project costs. High demand for concrete based structural components and internal fixings due to manufacturing delays and increased construction demand drove material price increases this quarter.

Over the past twelve months, Other residential building construction prices rose 7.5%.

Non-residential construction prices rose 1.3%

Non-residential construction prices increased, driven by New South Wales, Queensland and South Australia. Ongoing strong demand for skilled trades was the primary cost pressure, along with high prices for concrete based materials and internal fixings. Strong demand from within the construction industry, as well as across the mining sector, continues to place pressure on already stretched resources from the non-residential market.

Over the past twelve months, Non-residential building construction prices rose 8.0%.

Heavy and civil engineering construction prices rose 0.4%

  • Other heavy and civil engineering construction prices rose due to concrete price increases resulting from high energy and manufacturing costs, and wage cost rises from labour shortages. Falls in steel prices and the impact of the USD exchange rate partially offset these increases.
  • Road and bridge construction prices rose due to increased costs for concrete and bitumen, driven by high energy and manufacturing costs, coupled with strong global demand and limited supply.

Heavy and civil engineering construction prices rose 7.5% over the past twelve months.

Mining industries

Input to the coal mining industry

Input to the coal mining industry fell 0.2%

The main contributor was:

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

This movement was partially offset by:

  • Electricity generation, due to higher prices in contract renewals resulting from wholesale energy price increases impacted by recent supply constraints.

Over the past twelve months, Input to the coal mining industry prices rose 8.0%.

Output of the mining industry

Gas extraction, domestic rose 1.6%

Prices received for Gas extraction, domestic rose 1.6%, following a strong fall in the previous quarter as prices stabilise from the peak level in September 2022.

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

  • East coast +3.9%.
  • West coast -8.4%.

Over the past twelve months Gas extraction, domestic rose 15.4%.

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 rose 0.6%

Input prices to manufacturing rose 0.6% over the quarter and rose 5.0% over the past twelve months.

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

  • Metal ore mining to manufacturing (+6.4%), due to a rise in investor demand for gold, with high inflation and broader economic uncertainty driving more safe haven investment.
  • Electricity supply to manufacturing (+32.9%), due to the pass through of higher contract prices from rising wholesale electricity prices.
  • Coal mining to manufacturing (+14.7%), due to increased demand for coking coal as an input to steel production.

Offsetting the rise, were price falls in:

  • Agriculture to manufacturing (-3.9%), due to an increase in cattle slaughter rates and a decrease in the cost of stock feed.
  • Basic chemical production to manufacturing (-8.6%), due to a fall in the price of caustic soda as demand weakened following historically high prices.
  • Primary metal production to manufacturing (-3.3%), due to a fall in the price of imported iron and steel products following a decline in global economic confidence and the appreciation of the AUD.

Output of the manufacturing industry

Output prices of the manufacturing industries fell 0.6%

Output prices of the manufacturing industries fell 0.6% over the March quarter 2023 and rose 6.0% over the past twelve months.

The main contributors to fall in the Output of the manufacturing industries were:

  • Petroleum refining and petroleum fuel manufacturing (-10.6%), due to a fall in crude oil prices driven by a build up in inventories and softening demand from ongoing economic uncertainty.
  • Meat processing (-10.9%), due to a fall in global beef prices with the US increasing their slaughter rates in response to ongoing drought conditions.
  • Iron smelting and steel manufacturing (-3.8%), due to a fall in demand for iron and steel products.

Offsetting the fall, were price rises in:

  • Other basic non-ferrous metal manufacturing (+3.0%), due to a rise in investor demand for gold as it is viewed as a safe haven asset during times of economic uncertainty.
  • Basic inorganic chemical manufacturing (+14.4%), due to a rise in lithium prices in line with long term export contracts reflecting a strong increase in price in late 2022.

Services

Output of the services industries

Accommodation and food services prices rose, driven by:

  • Accommodation services (+4.2%), due to returning international travellers and increased demand from domestic travellers.
  • Cafes, restaurants, and takeaway food services (+0.7%), due to higher input and operating costs.

Over the past twelve months:

  • Accommodation services prices rose 24.6%.
  • Cafes, restaurants, and takeaway food services prices rose 5.9%.

 

Transport, postal and warehousing prices fell, driven by:

  • Road freight transport (-0.5%), due to falling fuel prices and adjustments to contract prices.
  • Water freight transport (-7.7%), due to continued easing of global supply chain congestion.

Partially offsetting the fall was:

  • Water transport support services (+2.3%), driven by a rise in prices following annual price reviews.

Over the past twelve months:

  • Road freight transport prices rose 10.5%.
  • Water freight transport prices fell 6.8%.
  • Water transport support services rose 5.2%.

 

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

  • Non-residential property operators (+2.4%), due to further rises in industrial rents as demand for warehouses and distribution centres continued to outstrip supply.
  • Other goods and equipment rental and hiring (+0.3%), due to increased labour and equipment purchase costs.

This was partially offset by:

  • Real estate services (-2.8%), due to lower residential property prices impacting fees received for sales, and a reduction in new properties coming onto the market resulting in increased service competition.

Over the past twelve months:

  • Non-residential property operators prices rose 9.0%.
  • Other goods and equipment rental and hiring prices rose 5.0%.
  • Real estate services prices rose 1.0%.

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

  • Architectural, engineering and technical services (+0.8%), due to high demand for engineering services across infrastructure programs, and the tight labour market.
  • Management advice and related consulting services (+1.2%), due to rises from annual pricing reviews.
  • Legal and accounting services (+0.5%), due to competition in the skilled labour market for staff.

Over the past twelve months:

  • Architectural, engineering and technical services prices rose 4.2%.
  • Management advice and related consulting services prices rose 3.8%.
  • Legal and accounting services prices rose 3.6%.

Education and training services

Education and training services prices rose in the March quarter 2023 due to fee increases across a number of universities and course levels. Price rises were recorded in:

  • Higher education, domestic (+2.9%), and
  • Higher education, exports (+2.7%).

 

Health care and social assistance industries rose, driven by:

  • Medical services (+1.4%), driven by rises in fees for general practice medical services.
  • Allied health services (+1.1%), driven by dental services due to the increase in the cost of consumables and business running costs.
  • Child care services (+1.5%), due to increases in labour and gross operating costs.

Over the past twelve months:

  • Medical services prices rose 3.6%.
  • Allied health services rose 3.7%.
  • Child care prices rose 5.2%.

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 [27.73 KB]

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

    Download xlsx [26.77 KB]

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

    Download xlsx [23.71 KB]

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

    Download xlsx [23.43 KB]

Data Explorer datasets

Caution: Data in Data Explorer is currently released after the 11:30am release on the ABS website. Please check the reference period when using Data Explorer.

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

From the March quarter 2023, the following additional indexes have been included in the Time Series Spreadsheets:

Table 35. Output of the Health care and social assistance industries will include group and class index numbers for:

  • Group 853 Allied health services
  • Class 8531 Dental services
  • Class 8532 Optometry and optical dispensing
  • Class 8533 Physiotherapy services
  • Class 8534 Chiropractic and osteopathic services
  • Class 8591 Ambulance services

The following Producer Price Index includes a re-weight this quarter:

  • 440 Accommodation

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 2023