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
September 2023
Released
27/10/2023
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Key statistics

Final demand (excluding exports)

  • Rose 1.8% this quarter.
  • Rose 3.8% 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

Final demand increased 1.8% this quarter with rises across most industries. Higher prices for construction outputs, petroleum and energy were compounded by broad-based price increases in services, particularly health and child care services. New financial year contract negotiations, indexation clauses, annual wage cost reviews and increasing operating costs contributed to price rises across services industries.

 Jun Qtr 23 to Sep Qtr 23Sep Qtr 22 to Sep Qtr 23
Final demand

% change

% change

Final demand (excl. exports)1.83.8

Index reference period: 2011-12 - 100.0.

The main contributors to quarterly growth in Final demand were:

  • Output of building construction (+1.3%), due to ongoing skilled labour shortages and increased manufacturing costs for materials. 

  • Petroleum refining and petroleum fuel manufacturing (+10.7%), due to strong global crude oil prices following reduced global supply, and the depreciating exchange rate.

  • Electricity supply; gas supply; and water supply, sewerage and drainage services (+5.9%), due to increases in supply and usage charges following annual reviews, reflecting increases in wholesale electricity costs.

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 recorded no change.

Input prices to house construction remained steady in the September quarter 2023. The 0.0% quarterly change follows sixteen consecutive quarterly price rises since December quarter 2019. Prices rose in Other materials and Ceramic products but were completely offset by falls in early stage construction materials, such as Structural timber and Steel products.

Although sustained activity in the residential construction sector continues to place upward pressure on demand for later stage products such as paints, continued falls in new housing construction resulted in suppliers discounting products used in earlier construction phases to compete in the tight market. Recent rises in energy prices continue to increase manufacturing costs for bricks and tiles.

Over the past twelve months, Input prices to house construction rose 4.4%.

In building materials, the main contributors were:

  • Other materials (+1.2%), driven by paints and other coatings (+5.4%), due to increased demand on later stage materials, and increased costs of raw materials due to crude oil prices.
  • Ceramic products (+1.9%), driven by clay bricks (+4.9%), due to increased manufacturing costs for electricity and gas as suppliers switch to new energy contracts.
  • Concrete, cement and sand (+1.4%), driven by ready mixed concrete (+1.3%), due to increased manufacturing costs from electricity, and strong demand from multiple sectors of construction.

Completely offsetting this were price falls in:

  • Timber, board and joinery (-0.8%), driven by structural timber (-2.8%), due to improved supply conditions, and reduced demand for new house construction.
  • Steel products (-1.8%), driven by reinforcing steel (-2.7%), due to easing demand from China, and reduced demand for new house construction.
  • Electrical equipment (-1.1%), driven by electrical cable and conduit (-1.5%), due to falling global copper prices.

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

  • Sydney (0.0%), driven by Other materials (+1.4%).
  • Melbourne (-0.4%), driven by Timber, board and joinery (-1.1%).
  • Brisbane (+0.6%), driven by Other metal products (+1.3%).
  • Adelaide (-0.2%), driven by Timber, board and joinery (-1.1%).
  • Perth (+0.3%), driven by Other materials (+1.8%).
  • Hobart (+0.3%), driven by Ceramic products (+10.9%).

Output of the construction industry

Output prices of the construction industries rose.

Building construction prices rose 1.3% this quarter and 5.1% over the past twelve months.

Growth in the Output of the construction industries was driven by labour cost increases due to ongoing shortages for skilled tradespeople together with strong industry demand. While material prices continued to stabilise, prices increased for structural components and internal fixtures due to high demand and manufacturing delays. Ongoing activity in the non-residential market, coupled with pressure from the residential and infrastructure sectors, continued to drive competition for limited resources.

The quarterly price movements by class were:

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

House construction prices rose 1.0%.

House construction prices rose this quarter, driven by increases in New South Wales and Western Australia. Ongoing labour shortages for finishing trades and price rises for end stage materials have resulted in cost escalations which have been applied to base prices this quarter, further adding to housing affordability concerns with demand for new builds continuing to ease.

Over the past twelve months, House construction prices rose 3.9%.

Other residential building construction prices rose 1.5%.

Other residential building construction prices increased this quarter, driven by growth in New South Wales and Queensland. Higher contractor rates this quarter were driven by increased margins. Labour shortages for skilled tradespeople, particularly finishing trades, continued to place upward pressure on project costs. Increased prices for concrete based structural components also contributed to the rise due to high demand, high manufacturing costs, and labour shortages.

Over the past twelve months, Other residential building construction prices rose 5.6%. 

Non-residential building construction prices rose 1.5%.

Non-residential construction prices rose this quarter, driven by increases in Queensland and New South Wales. Strong demand for skilled tradespeople, competition between construction sectors and increased margins resulted in higher contractor rates. Ongoing high prices for concrete based structural components and internal fixtures due to strong demand, high manufacturing costs, and labour shortages also influenced increased costs this quarter.

Over the past twelve months, Non-residential building construction prices rose 5.7%.

Heavy and civil engineering construction prices rose 0.9%.

  • Other heavy and civil engineering construction prices rose, due to skilled labour cost increases and rising material costs.

  • Road and bridge construction prices rose, due to concrete and aggregate price increases, driven by the flow through of higher electricity and labour costs on manufacturing costs.

Heavy and civil engineering construction prices rose 3.5% over the past twelve months.

Mining industries

Input to the coal mining industry

Input to the coal mining industry rose 2.9%.

The main contributors were:

  • Petroleum and coal product manufacturing, due to higher global crude oil prices and an increase in the fuel excise.
  • Professional, scientific and technical services, due to annual rate increases for Engineering consultants incorporating wage rises influenced by continued shortages and competition for skilled labour.

This movement was partially offset by:

  • Transport support services, due to reduced port activity and reduced water freight rates.

Over the past twelve months, Input to the coal mining industry prices rose 4.7%.

Output of the mining industry

Gas extraction, domestic rose 4.0%

Prices received for Gas extraction, domestic rose 4.0%, due to increased contract prices.

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

  • East coast production (+4.6%).
  • West coast production (+0.8%).

Over the past twelve months Gas extraction, domestic fell 9.5%.

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 1.7%

Input prices to manufacturing fell 1.7% over the quarter and 2.5% over the past twelve months. Prices continue 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:

  • Agriculture to manufacturing (-5.8%), due to further falls in the price of beef as cattle slaughter rates remain high amid increased supply from fully-stocked herds. 
  • Metal ore mining (-2.4%), due to nickel supply outpacing global demand, particularly from stainless steel and electric vehicle producers.
  • Basic chemical and chemical products (-5.4%), due to lower commodity prices for resins and improved local supply conditions.

Offsetting the fall, were price rises in:

  • Oil and gas extraction (+4.9%) due to oil supply cuts in OPEC+ nations raising the global cost of crude oil.
  • Non-metallic mineral mining and quarrying (+7.0%) due to an increase in the price of limestone and other non-metallic minerals into construction materials.

Output of the manufacturing industry

Output prices of the manufacturing industries rose 0.8%

Prices for the Output of the manufacturing industries rose 0.8% over the September quarter and 1.9% over the past twelve months.

 

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

  • Petroleum refining and petroleum fuel manufacturing (+12.6%), due to a rise in diesel and petrol prices following an increase in global crude oil prices.
  • Aircraft manufacturing and repair services (+16.7%), due to a rise in material and labour input costs for parts.

Offsetting the rise were price falls in:

  • Meat processing (-4.0%), due to increases in lamb and beef supply.
  • Basic inorganic chemical manufacturing (-20.7%), due to a reduction in lithium prices as global supply continues to expand. 
  • Other basic non-ferrous metal product manufacturing (-1.8%), due to nickel supply outpacing demand, particularly from stainless steel and electric vehicle producers.

Services

Output of the services industries

Accommodation and food services prices rose, driven by:

  • Cafes, restaurants and takeaway food services (+2.0%), due to higher input and operating costs.
  • Accommodation services (+3.7%), driven by increased demand in response to the winter and spring school holidays and major sporting events.

Over the past twelve months:

  • Cafes, restaurants and takeaway food services prices rose 6.6%.

  • Accommodation services prices rose 2.9%.

 

Transport, postal and warehousing services prices rose, driven by:

  • Postal and courier pick-up and delivery (+3.8%), due to annual rate reviews and rise in fuel prices for courier services.
  • Rail freight transport (+3.7%), due to demand for bulk freight transport services.
  • Airport operations and other air transport support (+3.9%), due to new service contract negotiations incorporating price increases related to higher operating costs.

This was partially offset by:

  • Water freight transport (-15.5%), due to continued easing from historic high prices as capacity increases and supply chain conditions continue to improve.

Over the past twelve months:

  • Postal and courier pick-up and delivery prices rose 2.6%.
  • Rail freight transport prices fell 0.3%.
  • Airport operations and other air transport support prices rose 6.1%.
  • Water freight transport prices fell 25.7%.

 

 

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

  • Non-residential property operators (+2.1%), due to further rises in industrial rents as demand for warehouses and distribution centres continues to outpace supply.
  • Other goods and equipment rental and hiring (+1.9%), due to higher fuel costs and upward pressure on wages from labour shortages amid continuing infrastructure and mining project activity.

This was partially offset by:

  • Real estate services (-0.4%), due to low advertised property supply levels and heightened service competition.
  • Passenger car rental and hiring (-1.3%), driven by a reduction in household short-term car hire rates due to reduced discretionary travel expenditure.

Over the past twelve months:

  • Non-residential property operators rose 7.8%.
  • Other goods and equipment rental and hiring rose 4.0%.
  • Real estate services fell 2.9%.
  • Passenger car rental and hiring fell 8.7%.

 

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

  • Architectural, engineering and technical services (+2.7%), due to sustained demand related to infrastructure project pipelines and continued limited supply of skilled labour.

  • Legal and accounting services (+3.0%), due to annual service rate reviews.

Over the past twelve months:

  • Architectural, engineering and technical services prices rose 4.4%

  • Legal and accounting services prices rose 5.1%.

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

  • Medical services (+3.0%), due to annual indexation of Medicare rebates effective from the beginning of the new financial year.
  • Childcare services (+5.7%), due to higher labour and operating expenses, such as rent and utilities.
  • Allied health services (+2.5%), driven by dental services due to increases in operating and labour costs, and annual indexation of Medicare rebates.

Over the past twelve months:

  • Medical services prices rose 5.1%.
  • Childcare services prices rose 8.3%.
  • Allied health services prices rose 4.7%.

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 [27.69 KB]

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

    Download xlsx [26.72 KB]

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

    Download xlsx [23.7 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

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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 future issues

As part of ABS’ ongoing shift to more modern data collection processes, all PPI Survey respondents will provide data online from December quarter 2023.

Methodology

Producer Price Indexes, Australia methodology, September 2023