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.

Reference period
September 2021
Released
29/10/2021

Key statistics

Final demand (excluding exports)

  • Rose 1.1% this quarter.
  • Rose 2.9% 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.

Quarterly overview

 Jun Qtr 21 to Sep Qtr 21Sep Qtr 20 to Sep Qtr 21
Final demand

% change

% change

Final demand (excl. exports)1.12.9

Index reference period: 2011-12 - 100.0.

The main contributors to quarterly growth in Final demand were:

  • Heavy and civil engineering construction (+2.1%), due to rises in wages and materials supported by increased public sector investment stimulus.
  • Output of building construction (+2.2%), due to builders continuing to pass through increases in material and trade prices, supported by continued strong demand for housing.
  • Petroleum refining and petroleum fuel manufacturing (+11.8%), due to rising global crude oil demand and delays in OPEC+ oil agreement to raise production.

Offsetting the rise were price falls in:

  • Accommodation services (-5.5%), due to decreased domestic travel demand, resulting from COVID-19 restrictions and border closures throughout the quarter.

The annual rise of 2.9% in Final demand to September 2021 is the strongest increase since December 2011.

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 4.0%

Input prices to house construction rose due to strong material cost increases and state and federal based grants driving demand in the residential sector. Supply shortages and increasing transport costs for steel and timber materials have placed upward pressure on prices.

Over the past twelve months, Input prices to house construction rose 8.0%, due to; Timber, board and joinery (+12.2%) and Other metal products (+8.8%).

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

  • Timber, board and joinery (+5.3%), driven by structural timber (+9.3%), due to continued supply shortages for timber.
  • Other metal products (+5.3%), driven by aluminium windows and doors (+7.9%), due to price rises in aluminium, glass and timber as a result of increasing international freight costs and production shortages.
  • Steel products (+13.1%), driven by steel beams and sections (+11.1%) due to supply chain disruptions and strong global metals prices.
  • Other materials (+2.3%), driven by carpet and floor covering (+4.2%), due to end of promotional sales and suppliers passing through increasing costs.

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

  • Melbourne 5.4%, driven by Other metal products (+9.2%).
  • Adelaide 3.8%, driven by Timber board and joinery (+6.5%).
  • Perth 3.7%, driven by Other metal products (+4.0%).
  • Brisbane 3.5%, driven by Timber board and joinery (+5.5%).
  • Hobart 3.5%, driven by Timber board and joinery (+5.3%).
  • Sydney 2.6%, driven by Timber board and joinery (+3.8%). 

Output of the construction industry

Output prices of the construction industries

Building construction prices rose 2.1% this quarter and 5.4% over the past twelve months.

Government stimulus in the residential sector and increased activity due to public investment in infrastructure is driving demand for labour. Continued supply shortages have resulted in an upward trend in material prices.

The quarterly price movements by class were:

  • House construction (+3.7%)
  • Other residential building construction (+1.0%)
  • Non-residential construction (+1.5%)

House construction prices rose 3.7%

House construction prices rose, driven by increases in trade prices and rising material costs for timber and steel due to supply constraints. Increased industry demand has enabled builders to continue passing on rising costs from suppliers and reduce bonus offers.

Over the past twelve months House construction prices rose 8.9%.

Other residential building construction prices rose 1.0%

Other residential construction prices increased across all states driven by rises in materials and trade costs. Rises in head contractor margins and preliminary costs were recorded in Queensland, Western Australia and South Australia. Strong demand for skilled cross over trades and materials, driven by the residential and civil infrastructure sectors has resulted in an upward trend in costs.      

Over the past twelve months Other residential building construction prices rose 3.1%.

Non-residential construction prices rose 1.5%

Non-residential construction prices recorded an increase across all states with strong increases recorded in Queensland, Western Australia, Tasmania and South Australia. Increases in head contractor margins and preliminary costs were recorded in Queensland, Western Australia and South Australia. Tasmanian price rises have been influenced by stimulus initiatives and border closures limiting labour supply.

Over the past twelve months Non-residential building construction prices rose 4.2%.

Heavy and civil engineering construction prices rose 2.2%

  • Other heavy and civil engineering construction prices rose, due to increased steel costs and head contractor margins.
  • Road and bridge construction prices rose due to increased costs for steel and oil, driven by strong demand, supply shortages and increasing freight costs.

Over the past twelve months, Heavy and Civil engineering construction prices rose 4.5%.

Mining industries

Input to the coal mining industry

Input prices to the coal mining industry rose 2.5%, due to:

  • Petroleum and coal product manufacturing, driven by continued recovery in demand for transport fuel and rising global crude oil prices.
  • Electrical supply, driven by new financial year contracts commencing throughout the quarter.

Over the past twelve months Input to the coal mining industry prices rose 4.3%.

Output of the mining industry

Prices received for Gas extraction, domestic rose 9.5%, due to:

  • Increases in global crude oil and Asian LNG spot prices.
  • Over the past twelve months Gas extraction, domestic prices rose 25.2%.

East Coast gas extraction prices increased more than West Coast in the September quarter 2021

Domestic gas extraction quarterly price change
This map shows Domestic gas extraction quarterly price change. West coast rose 4.7.% Prices for West coast domestic gas extraction rose over the quarter, inline with global oil prices. Oil prices have rebounded after strong falls in 2020 due to COVID-19. East coast rose 10.4% Prices for East coast domestic gas extraction rose over the quarter. The price increase is driven by international LNG markets.

Manufacturing

Input to the manufacturing industry

Input prices to the manufacturing industries rose 4.6%

Input prices to manufacturing rose 4.6% over the quarter and rose 11.2% over the past twelve months.

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

  • Primary metal and metal production manufacturing (+14.0%), due to tight global steel supplies and increasing demand.
  • Oil and gas extraction to manufacturing (+11.1%), due to increased demand in crude oil driven by easing COVID-19 restrictions and delays to OPEC+ oil supply agreements.
  • Basic chemical and chemical product manufacturing (+9.3%), due to rising crude oil prices, record freight costs and delays at major international ports affected by COVID-19 cases.

Offsetting the rise, was a price falls in:

  • Metal ore mining to manufacturing (-1.3%), due to reduced demand in iron ore from China driven by strict emissions policies.

Output of the manufacturing industry

Output prices of the manufacturing industries rose 3.9%

Output prices of the manufacturing industries rose 3.9% over the quarter and 7.8% over the past twelve months.

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

  • Petroleum refining and petroleum fuel manufacturing (+11.6%), due to increases in global crude oil prices, driven by continued recovery in transport fuel demand and delays to OPEC+ production supply agreements.
  • Meat processing manufacturing (+7.7%), due to strong global demand for beef and reduced supply, exports from Brazil declined following detected cases of mad cow disease and export restrictions continued in Argentina.
  • Other basic non-ferrous metal manufacturing (+4.3%), due to precious metals, driven by a depreciation in the Australian dollar offsetting a small decrease in global gold prices.

Offsetting the rise, were price falls in:

  • Synthetic resin and synthetic rubber manufacturing (-5.0%), due to global supplies returning to normal after colder than average US winter temperatures slowed production.
  • Wine and other alcoholic beverage manufacturing (-1.1%), due to price falls in wine exports driven by improved growing conditions as vineyards continue to recover after the 2020 bushfires.
  • Biscuit manufacturing (-2.0%), due to promotional activity on biscuits and rusks.

Services

Output of the services industries

Accommodation and food services prices fell, driven by: 

  • Accommodation services (-5.7%), due to decreased domestic travel demand, resulting from COVID-19 restrictions and border closures throughout the quarter.

Offsetting the fall was:

  • Cafes, restaurants, and takeaway food services (+1.3%).

Over the past twelve months:

  • Accommodation services prices rose 7.2%.
  • Cafes, restaurant and takeaway food services prices rose 3.3%.

Transport, postal and warehousing prices rose, driven by:

  • Water freight transport (+42.7%), due to ongoing port congestion caused by COVID-19 delays particularly across Asia. Strikes in Australian ports also contributed to delays, further increasing prices. Water Freight Transport services recorded its highest price index since the time series started in September 1998.
  • Road freight transport (+0.9%), due to increased fuel costs.

Over the past twelve months:

  • Water freight transport prices rose 104.8%.
  • Road freight transport prices rose 3.1%.

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

  • Real estate services (+2.4%), due to strong growth in the housing market.
  • Non-residential property operators (+0.6%), due to a rise in industrial rents resulting from increased demand for industrial spaces to store e-commerce goods. Offsetting this rise are falls in office and retail rents.

Offsetting the rise was:

  • Passenger car rental and hiring (-18.4%), due to large falls in demand resulting from COVID-19 related travel restrictions in NSW, VIC and ACT.

Over the past twelve months:

  • Real estate services prices rose 6.3%.
  • Non-residential property operators fell 0.2%.
  • Passenger car rental and hiring prices rose 56.7%.

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

  • Engineering design and engineering consulting services (+3.7%), due to increased wages and incentives to retain staff.
  • Legal services (+2.1%), due to stronger demand and increased wage costs resulting from annual reviews.

Over the past twelve months:

  • Engineering design and engineering consulting services prices rose 5.8%.
  • Legal services prices rose 3.1%.

Health care and social assistance industries prices rose, driven by: 

  • Medical services (+1.1%), due to annual indexation that occurs at the start of every financial year to cover increasing costs.
  • Child care services (+2.1%), due to wage increases resulting from enterprise agreements.

Over the past twelve months:

  • Medical services prices rose 1.6%.
  • Child care prices rose 13.7%.

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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

Manufacturing

Input to the manufacturing industry

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 

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

There have been no changes to this quarter's release.

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.

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