The ABS undertook this work as part of the 2020 graduate program. Analysis was conducted by: Audrey Ardolino, William Croxson, Michael Davies, Fiona Mackie and Katrina Millner.
The Consumer Price Index (CPI) measures price change for goods and services purchased by Australian households in the eight capital cities. It is a measure of inflation that informs monetary and fiscal policy. It is also used widely by economists and the general community to assess the health of the Australian economy.
An area of interest is whether prices are increasing at the same rate for goods and services that could be considered essential (non-discretionary), compared to goods and services that are more discretionary in nature. To inform this, the ABS has classified CPI goods and services into two categories: ‘Non-discretionary’ and ‘Discretionary’.
Analysis indicates that prices of non-discretionary goods and services increased slightly faster than for discretionary goods and services. Over the period 2012 to 2019, cumulative non-discretionary inflation was 14.8 per cent, whereas discretionary inflation was 12.9 per cent. Excluding the impact of tobacco (which more than doubled in price over the period) resulted in lower discretionary inflation of 6.4 per cent.
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