Producer Price Indexes, Australia

Latest release

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

Reference period
September 2022
Released
28/10/2022
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    Producer Price Indexes, Australia, December 2022
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    Producer Price Indexes, Australia, Issue For Mar 2023
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    Producer Price Indexes, Australia, New Issue For Jul 2023
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Key statistics

Final demand (excluding exports)

  • Rose 1.9% this quarter.
  • Rose 6.4% 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.

The September quarter 2022 issue of the Producer Price Indexes includes re-weighted price indexes for:

  • 3011 Outputs of House construction
  • 3019 Outputs of Other residential building construction
  • 3020 Outputs of Non-residential building construction

Quarterly overview

 Jun Qtr 22 to Sep Qtr 22Sep Qtr 21 to Sep Qtr 22
Final demand

% change

% change

Final demand (excl. exports)1.96.4

Index reference period: 2011-12 - 100.0.

The main contributors to quarterly growth in Final demand were:

  • Output of building construction (+2.8%), due to continuing skilled labour shortages, high freight costs and timber and metal supply constraints.
  • Heavy and civil engineering construction (+2.6%), due to an increase in prices for diesel and construction materials, ongoing labour shortages and high import costs.
  • Electricity, gas and water (+9.8%), due to annual electricity supply costing reviews, reflecting high wholesale electricity costs and large rises in electricity futures prices.

The annual rise of 6.4% in Final demand to September 2022 is the strongest increase since the series began in September 1998.

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 2.9%

Input prices to house construction increased 2.9% in the September quarter, primarily due to increases in timber and other metal products. Residential construction demand remains strong, with suppliers passing through price increases caused by ongoing supply constraints for building materials and high freight costs.

Over the past twelve months, Input prices to house construction rose 16.0%, due to; Timber, board and joinery (+21.2%) and Other metal products (+16.4%).

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 (+2.8%), driven by timber windows (+6.8%), due to increased glass prices, ongoing supply constraints for timber and high freight costs.
  • Other metal products (+3.5%), driven by aluminium windows and doors (+3.8%), due to increased glass prices, tight supply and high freight costs.
  • Other materials (+2.8%), driven by plaster products (+3.0%), due to price rises for plaster materials, increased manufacturing costs and high freight costs. 

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

  • Sydney (+3.8%), driven by Timber, board and joinery (+5.6%).
  • Melbourne (+2.6%), driven by Concrete, cement and sand (+10.9%).
  • Brisbane (+2.0%), driven by Concrete, cement and sand (+6.2%).
  • Adelaide (+4.2%), driven by Timber, board and joinery (+6.5%).
  • Perth (+2.2%), driven by Ceramic products (+7.5%).
  • Hobart (+5.6%), driven by Other metal products (+14.9%).

Output of the construction industry

Output prices of the construction industries

Building construction prices rose 2.7% in the September quarter and 12.8% over the past twelve months, the largest annual increase since the series began.

Skilled labour shortages, higher freight costs and ongoing supply concerns are continuing to drive growth in the Output of construction industries this quarter. Activity levels remain strong across all construction sectors, with builders continuing to pass through cost increases previously absorbed into margins.

The quarterly price movements by class were:

  • House construction (+4.2%).
  • Other residential building construction (+1.8%).
  • Non-residential construction (+1.8%).

House construction prices rose 4.2%

House construction prices increased across all states this quarter, with South Australia and Tasmania showing the strongest increases, while price growth slowed in both the Northern Territory and Western Australia. Higher freight costs and tight supplies of timber, steel, and insulation, combined with ongoing shortages for skilled trades, continue to place pressure on construction input costs.

Over the past twelve months House construction prices rose 20.5%.

Other residential building construction prices rose 1.8%

Other residential construction prices increased across all states this quarter with the strongest rise in Queensland, while price growth eased in Western Australia and Tasmania. Tightened availability of skilled trades, increased costs for imported materials, and high prices for steel, timber, and concrete continue to place upward pressure on input costs.

Over the past twelve months Other residential building construction prices rose 8.4%.

Non-residential construction prices rose 1.8%

Non-residential construction prices increased across all states this quarter. Material price rises are being driven by elevated steel, reinforcement and concrete prices and continuing higher freight costs. Increased activity in the non-residential market, and ongoing competition for skilled trades from across the construction and mining industries has placed additional pressure on labour cost.

Over the past twelve months Non-residential building construction prices rose 9.2%.

Heavy and civil engineering construction prices rose 2.7%

  • Other and civil engineering construction prices rose due to increased costs for diesel and skilled trades, and high freight costs.
  • Road and bridge construction prices rose due to increased costs for concrete and bitumen driven by high energy and manufacturing costs, coupled with high demand.

Heavy and civil engineering construction prices rose 9.6% over the past twelve months.

Mining industries

Input to the coal mining industry

Input to the coal mining industry rose 2.6%

The main contributors were:

  • Petroleum and coal product manufacturing due to increased diesel prices.
  • Transport support services due to increases in road freight driven by higher fuel surcharges.

Over the past twelve months Input to the coal mining industry prices rose 11.8%.

Output of the mining industry

Gas extraction, Domestic rose 21.7%

Prices received for Gas extraction, Domestic rose 21.7%, the highest quarterly growth rate since the series began.

Over the past twelve months Gas extraction, domestic rose 58.5%.

Record price increases for East coast gas extraction are driving the growth in domestic gas extraction this quarter

Domestic gas extraction quarterly price change

Record price increases for East coast gas extraction are driving the growth in domestic gas extraction this quarter

This map shows Domestic gas extraction quarterly price change.
West coast rose 2.4%
Prices for Western Australia domestic gas extraction rose over the quarter due to contract escalation. Sufficient supply ensures price stability in the domestic market.
East coast rose 25.8%
Prices for East coast domestic gas extraction rose over the quarter. The price increase is due to strong demand for spot cargoes amid an expected supply shortfall.

Manufacturing

Input to the manufacturing industry

Input prices to manufacturing rose 1.5%

Input prices to manufacturing rose 1.5% in the September quarter and rose 14.3% over the past twelve months.

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

  • Oil and gas extraction to manufacturing (+15.2%), due to the passing through of wholesale gas prices to accommodate increasing demand and costs associated with ensuring energy supplies were undisrupted throughout the quarter.
  • Basic chemical and chemical product to manufacturing (+6.0%), due to a tightened global supply of caustic soda and high energy costs driving up production costs.
  • Electricity to manufacturing (+13.7%), due to annual electricity supply costing reviews, reflecting high wholesale electricity costs and large rises in electricity futures prices.

Offsetting the rise, was a price fall in:

  • Metal ore mining to manufacturing (-8.6%), due to falls in copper and nickel prices as investor demand decreases, driven by concerns around future demand in a slowing global economy.
  • Coal mining to manufacturing (-41.9%), due to a fall in demand for coking coal in China due to a decrease in crude steel production.
  • Primary metal and metal product manufacturing to manufacturing (-2.9%), due to stainless steel prices decreasing as the price of nickel falls.

Output of the manufacturing industry

Output prices of the manufacturing industries rose 0.4%

Output prices of the manufacturing industries rose 0.4% over the September quarter and 14.2% over the past twelve months.

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

  • Cheese and other dairy product manufacturing (+6.3%), driven by cheese exports due to a rise in untreated milk, freight and packaging coupled with high international energy costs, driving up global cheese prices.
  • Basic inorganic chemical manufacturing (+26.6%), due to a global shortage of lithium as demand for electric vehicle batteries increases.
  • Prepared animal and bird feed manufacturing (+9.6%), due to the passing through of higher grain costs resulting from supply disruptions in the Black Sea region.

Offsetting the rise were price falls in:

  • Petroleum refining and petroleum fuel manufacturing (-5.2%), due to decreasing crude oil prices and refinery margins, and a fall in global demand for petrol.
  • Other basic non-ferrous metal manufacturing (-5.1%), due to a fall in investor demand for gold as financial investments become more desirable with rising interest rates.
  • Alumina production (-17.5%), due to reduced demand from China as energy shortages have led to a decrease in aluminium smelter operations.

Services

Output of the services industries

Accommodation and food services prices rose, driven by:

  • Accommodation services (+2.0%), due to increased demand during Winter and Spring school holidays and major sporting events.
  • Cafes, restaurants, and takeaway food services (+1.0%), due to higher input costs and wage increases.

Over the past twelve months:

  • Accommodation services prices rose 25.5%.
  • Cafes, restaurants, and takeaway food services prices rose 5.6%.

Transport, postal and warehousing prices rose, driven by:

  • Road freight transport (+5.9%) and Rail freight transport (+8.3%), due to the passing through of high fuel prices and other input costs. Also impacted by tight labour supply.
  • Postal and courier pick-up and delivery services (+2.1%), due to rising fuel costs and price increases following annual pricing reviews.

This was partly offset by:

  • Airport operations and other air transport support services (-3.2%), due to falling security costs.

Over the past twelve months:

  • Road freight transport prices rose 13.7%.
  • Rail freight transport rose 11.3%.
  • Postal and courier pick-up and delivery services rose 8.8%.
  • Airport operations and other air transport support services fell 5.3%.

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

  • Non-residential property operators (+2.8%), due to a rise in industrial rents with limited supply of industrial spaces and higher demand in the lead up to Christmas.
  • Other Goods and Equipment Rental and Hiring (+1.4%), due to price increases following annual pricing reviews and rising input costs.

This was partly offset by:

  • Passenger car rental and hiring (-9.9%), due to increased supply of motor vehicles for hire and reduced demand between the school holiday periods. This was partially offset by increased demand during Winter and Spring school holidays.

Over the past twelve months:

  • Non-residential property operators rose 6.8%.
  • Other Goods and Equipment Rental and Hiring rose 6.1%.
  • Passenger car rental and hiring prices rose 26.2%.

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

  • Computer system design and related services (+2.1%), due to increased demand for e-commerce capabilities and other services with the ongoing shift toward remote working.
  • Legal and accounting services (+1.5%), due to increases in operational costs and shortages of qualified labour.
  • Management advice and related consulting services (+1.6%), due to high service demand and increased wages.

Over the past twelve months:

  • Computer system design and related services prices rose 1.9%.
  • Legal and accounting services prices rose 3.2%.
  • Management advice and related consulting services prices rose 4.6%.

Health care and social assistance industries rose, driven by:

  • Medical services (+1.5%), due to annual indexation effective from the beginning of the new financial year.
  • Child care services (+2.9%), due to increases in labour and gross operating costs.

Over the past twelve months

  • Medical services prices rose 2.5%.
  • Child care services prices rose 5.3%.

Data downloads

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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

The September quarter 2022 issue of the Producer Price Indexes includes re-weighted price indexes for:

  • 3011 Outputs of House construction
  • 3019 Outputs of Other residential building construction
  • 3020 Outputs of Non-residential building construction

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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