Consumer Price Index FAQs
ABOUT THE CPI
The Australian CPI is measured on an acquisitions approach. This approach is considered to be the most suitable approach when the primary purpose of the CPI is as a macro-economic indicator of price inflation affecting households.
For more information about direct and derived measures of price change, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 14 "The system of price statistics".
Q. Is the CPI a cost of living index?
A. The CPI frequently is called a cost of living index, but it differs in important ways from a complete cost-of-living measure. Both the CPI and a cost of living index measure the changes in prices of goods and services that are purchased by households. The Australian CPI measures the changes in price of a fixed basket of goods and services whereas a cost of living index measures the change in the minimum expenditure needed to maintain a certain standard of living.
In practice, no statistical agencies compile true cost of living or purchasing power measures as it is too difficult to do. A cost of living index requires access to both price and current household consumption each period, as well as an assessment of households' welfare which depends on a variety of physical and social factors that have no connection with prices.
As the CPI is intended to measure the overall inflation in prices of goods and services acquired by Australian households, it is used as a proxy measure of cost of living or purchasing power.
More information is available in Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 4 "Price Index Theory".
Q. What was the change to the Australian CPI principal purpose in 1998?
A. The Australian CPI is an important economic indicator. It measures price changes facing households. It is compiled according to international standards, and is based on robust data collection and compilation methodologies.
Prior to the September quarter 1998, the CPI was compiled primarily to be used for income adjustment through wage indexation. This had implications for the coverage and design of the index. It was limited to the expenditures made by households whose principal source of income was wages. It measured out-of-pocket living expenses, including mortgage interest payments.
Since the September quarter 1998, the principal purpose of the CPI has been to measure inflation faced by households to support macro-economic policy decision making. The CPI covers the expenditures of all households (not just those whose principal source of income is wages, as was the case before 1998) and measures the changes in the prices of a fixed basket of goods and services acquired each period.
In recognition of the interest in the extent to which the impact of price change varies across different groups in the community, in addition to the CPI, the ABS compiles Selected Living Cost Indexes, Australia (cat. no. 6467.0) (SLCIs).
The SLCIs measure out-of-pocket living expenses incurred by selected population sub-groups of Australian households. The most notable difference between these indexes and the CPI is that the living cost indexes include interest charges but do not include new house purchases, while the CPI includes new house purchases but does not include interest charges. For more information refer to the Explanatory Notes within the Selected Living Cost Indexes, Australia (cat. no. 6467.0).
The ABS compiles the CPI and a range of other indexes according to agreed standards and to high quality. The CPI is used for a variety of purposes. The ABS provides explanations of the principal purpose and the concepts, sources and methods used in compiling the CPI and other indexes. Based on this information, it is up to users to determine which index is the best to use. The ABS neither endorses nor discourages these choices.
More information regarding the reasons for the change to the CPI is available in Information Paper: Outcome of the 13th Series Australian Consumer Price Index Review, 1997 (cat. no. 6453.0).
Q. What are the Selected Living Cost Indexes (SLCIs) and how do they compare with the CPI?
A. As a single index cannot be expected to adequately fulfil all purposes, and in recognition of the widespread interest in the extent to which the impact of price change varies across different groups in the community, the ABS compiles and publishes Selected Living Cost Indexes, Australia (cat. no. 6467.0), specifically designed to measure changes in living costs for selected population sub-groups. They are particularly suited for assessing whether or not the disposable incomes of households have kept pace with price changes. The employee households living cost index is calculated on a similar basis as the CPI prior to the September quarter 1998.
The SLCIs are constructed using the "Outlays method" which measures changes in the prices of goods or services for which payments were made to gain access to goods and services i.e. the purchasing power of the after-tax incomes of households. It is therefore concerned with measuring the impact of changes in prices on the out-of-pocket expenses incurred by households to gain access to consumer goods and services.
In contrast, the CPI uses the "Acquisitions method" which measures changes in the prices of goods and services acquired (actually received). As such, it is designed to measure price inflation for the household sector as a whole.
In practice, for most goods and services purchased by the reference population, outlays and acquisitions occur within a relatively short space of time, leading to no difference in methodology. However, there are three areas of expenditure in which these conceptual approaches provide significantly different results: purchase of dwellings, purchase of durable items and financial services and the use of credit. The most notable differences caused by this are that living cost indexes include interest charges but do not include new house purchases, while the CPI includes new house purchases but does not include interest charges. For more information refer to the Explanatory Notes within the Selected Living Cost Indexes, Australia (cat. no. 6467.0).
Households have been categorised based on the principal source of household income, derived from the 2015-16 Household Expenditure Survey (HES). The four household types in scope of the HES account for over 90% of Australian households. The four household types that have been identified as being appropriate for the construction of these indexes, are:
The Pensioner and Beneficiary Living Cost Index (PBLCI) was introduced in the June quarter 2009 and is a measure of the effect of changes in prices on the out-of-pocket living expenses experienced by the following two groups of households in the Australian population:
For the latest statistics on living cost indexes, refer to the product Selected Living Cost Indexes, Australia (cat. no. 6467.0).
Q. How is the CPI basket determined?
A. The CPI basket is based on actual household expenditure data, which is principally derived from the HES conducted by the ABS. The HES collects detailed information about the expenditure, income, assets, liabilities and household characteristics from a sample of just under 8,000 households resident in private dwellings in the eight capital cities.
In addition to the HES, market expenditure and sales data is routinely monitored and applied to ensure the price samples continue to be representative below the published level of data.
For more information, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 6 "Weights and their sources", and Consumer Price Index: Correspondence with 2015-16 Household Expenditure Classification, Australia, 2017 (cat. no. 6446.0.55.001).
For information on the HES, refer to Household Expenditure Survey, Australia: Summary of Results, 2015-16 (cat. no. 6530.0).
Q. What goods and services does the CPI cover?
A. The basket contains representative items actually acquired by households. The actual items priced for the CPI basket are determined based on a number of factors. Items:
For practical reasons, the basket cannot include every item bought by households, but those it does include are carefully selected to represent the range of goods and services actually acquired by households. Selection is made only after obtaining detailed information about the buying habits of households, such as varieties and brands. The items selected should be representative, so that the index will reflect the price changes for a much wider range of goods and services than is actually priced.
Typical examples of the types of goods and services represented in the basket can be found in A Guide to the Consumer Price Index: 17th Series, 2017 (cat. no. 6440.0), Appendix 2 "Examples of goods and services priced in the 17th Series CPI".
For more information, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 5 "Coverage and classifications", and Chapter 7 "Sampling".
Q. How and where are CPI prices collected?
A. The collection of prices in each capital city is carried out by trained ABS staff operating out of the various State and Territory offices of the ABS, while some prices are collected as administrative datasets or special surveys. Transactions data was introduced into the CPI in the March quarter 2014 and is predominantly used for food and non-alcoholic beverages, tobacco, automotive fuel, and non-durable household goods. From the December quarter 2017, the ABS has implemented a new method to make greater use of transactions data to compile the Australian CPI. This new method, known as a multilateral index method, utilises a census of products available from transactions datasets, and weights products at the elementary level by expenditure share. For further information on the use of transactions data in the CPI, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 15 "Use of transactions data in the Australian CPI".
Prices are collected in the same kinds of retail outlets, and other places, where consumers purchase their goods and services. For each item selected for pricing, the main types of outlets from which households buy the items need to be identified so that a representative sample of these outlets can be selected. Examples of these outlets include supermarkets, department stores, hotels, motor vehicle dealerships, schools, child care centres and on-line websites.
The prices used in the CPI are those that any member of the public would have to pay to purchase the specified good or service. Any taxes levied on goods or services (such as the GST) are included in the CPI price. Similarly, prices are adjusted by any subsidy or assistance provided directly by government (e.g. Child Care Benefit, Medicare). Sale prices, discount prices and 'specials' are reflected in the CPI so long as the items concerned are of normal quality (i.e. not damaged or shopsoiled), and are offered for sale in reasonable quantities. Any concessions available to particular groups of the population (such as age pensioners) are also taken into account where significant. Where an item is priced over the internet, any delivery or processing charges payable are included in the price.
The frequency of price collection by item varies as necessary to obtain reliable price measures. Prices of some items are volatile (i.e. their prices may vary many times each quarter) and for these prices frequent price observations are necessary to estimate a reliable average quarterly price. Each month prices are collected at regular intervals for goods such as clothing and footwear, alcohol, and domestic and overseas airline tickets. In the case of transactions data, revenue and quantity data are collected on a weekly basis.
For most other items price volatility is not a problem and prices are collected once a quarter. There are a few items where prices are changed at infrequent intervals, for example education services where prices are set once a year. In these cases the frequency of price collection is modified accordingly.
For more information, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 7 "Sampling", Chapter 8 "Price collection", and Chapter 10 "Consumer Price Index calculation in practice".
Q. How are transactions data used in the CPI?
A. The price for an individual product is calculated from the transactions data by dividing a product’s revenue by the quantity sold. This price is referred to as a product unit value and represents the average price paid by consumers over a particular period (e.g. one week or one month). A product’s unit value is more representative of prices paid by consumers over the reference period than point-in-time pricing. From March quarter 2014, the ABS significantly increased its use of transactions data to compile the Australian CPI, now accounting for approximately 25 per cent of the weight of the Australian CPI. The approach adopted was a 'direct replacement' of observed point-in-time prices with a unit value calculated from the transactions data. The ABS applied this approach until the September quarter 2017.
From the introduction of the 17th series CPI in December quarter 2017, the CPI is reviewed and re-weighted annually in December quarters. The primary data source for updating the weights in inter-HES years is Household Final Consumption Expenditure (HFCE) data from the National Accounts. For further information regarding the first annual re-weighting of the CPI, refer to: Information Paper: Introduction of the Consumer Price Index Weight Update, 2018 (cat. no. 6470.0.55.002). The HES will continue to be used as the primary data source for re-weighting the CPI in the years where it is available. Further information on annual re-weighting can be found in the following information papers:
Q. How is the CPI calculated?
A. The ABS invests considerable effort to ensure the quality of the CPI. Each quarter, almost 900,000 separate price quotations are used in the calculation of the CPI, with data being collected by trained and experienced ABS staff and other sources such as transactions and administrative data for a representative range of goods and services that Australian households acquire. The changes in price of these goods and services are combined with actual expenditure data of Australian households to calculate the overall price change in the quarter.
For more information, refer to A Guide to the Consumer Price Index: 17th Series, 2017 (cat. no. 6440.0) Chapter 4, 'Calculating the CPI'.
Q. How is the CPI reviewed?
A. Like any other long-standing and important statistical series, the CPI is reviewed and updated periodically to ensure that it continues to meet community needs. The timing of these reviews has generally been linked to the results from the Household Expenditure Survey, Australia, Summary of Results (cat. no. 6530.0), which collects information about the expenditures of approximately 8,000 metropolitan households. An important objective of these reviews is to update the weights in the CPI to reflect the goods and services purchased by Australian households. They also provide an opportunity to reassess the scope and coverage of the index and other methodological issues.
The last review of the CPI was the 17th series, undertaken in 2017 and implemented in respect of the December quarter 2017 issue. The 17th series review was a minor review of the CPI, consisting of an update of the upper level (expenditure class) weights in line with the 2015-16 HES, and a simple examination of structures and methodologies. For further information regarding the changes in the 17th series, refer to: Information Paper: Introduction of the 17th Series Australian Consumer Price Index, 2017 (cat. no. 6470.0.55.001).
From the introduction of the 17th series CPI in December quarter 2017, the CPI is reviewed and re-weighted annually in December quarters. The primary data source for updating the weights in inter-HES years is Household Final Consumption Expenditure (HFCE) data from the National Accounts. The HES will continue to be used as the primary data source for re-weighting the CPI in the years where it is available. Further information on annual re-weighting can be found in the following information papers:
Q. Why are there quality adjustments in the CPI?
A. The CPI aims to measure price changes for a fixed basket of goods and services over time. In the real world, however, things don't remain constant - manufacturers and service providers are continually changing their products and services which may result in an improvement or degradation in quality. One challenge in compiling the CPI is to have it only measure any product price change excluding the effects of any quality change. Quality adjustments are the main procedure for ensuring continuity of consistent quality in the basket of goods and services over time.
Examples of changes in quality might include:
For more information on quality adjustments, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapters 8 "Price Collection" and 9 "Quality change and new products".
Q. How are taxes treated in the CPI?
A. The CPI measures changes in final transaction prices actually paid by Australian households. The prices collected in the CPI include taxes where they are tied to the level of consumption of a specific good or service. Examples of taxes which are included in the CPI include:
Local government rates and charges are also included in the Australian CPI as they are examples of inescapable costs associated with home ownership.
For more information, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 5 "Coverage and classifications".
Q. How are subsidies treated in the CPI?
A. As with taxes, prices collected in the CPI are adjusted for any subsidy or assistance provided directly by government that are tied to the level of consumption of a specific good or service. Examples of such subsidies include:
For more information, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 5 "Coverage and classifications".
INTERPRETING CPI RESULTS
Q. How do I read or interpret a price index?
A. A price index is a tool that allows users to calculate movements over time. The indexes show how prices have changed relative to a value of 100.0 in the index reference period. Most of the Consumer Price Indexes have an index reference period of the financial year 2011/12 = 100.0. An index of 110, for example, means there has been a 10 per cent increase in price since the index reference period; similarly an index of 90 means a 10 per cent decrease since that index reference period. Movements of the index from one date to another can be expressed as either points or percentage changes.
For more information on interpreting index numbers, refer to A Guide to the Consumer Price Index: 17th Series, 2017 (cat. no. 6440.0), Section 3 "Using the CPI".
Q. How can I use a price index to calculate the change in prices between any two points in time?
A. Movements in prices can be calculated between any two time periods, and expressed as changes in index points or as percentage changes. The change in index points can be calculated by subtracting the two price indexes from the different time periods. The percentage change can be calculated by dividing the change in index points by the earlier time period price index multiplied by 100.
The following example illustrates the method of calculating changes in index points and percentage changes between the June quarter 2016 and June quarter 2017, but can be applied to any two points in time from the same price index series:
All Groups CPI, Weighted average of eight capital cities (2011/12 = 100.0)
June quarter 2016/2017 All Groups CPI
Note that the Change in index points and the Percentage change are different measures of change and are usually different. For more information on interpreting index numbers, refer to A Guide to the Consumer Price Index: 17th Series, 2017 (cat. no. 6440.0), Section 3 "Using the CPI".
Q. How do I calculate changes in the CPI between calendar or financial years?
A. Users may want to compare changes in the prices between two periods longer than a quarter, such as between two years. Index numbers for calendar or financial years are calculated as simple (arithmetic) averages of the four quarterly index numbers for the relevant period. Calendar years are calculated as the simple (arithmetic) average of the March, June, September and December quarters for the relevant year. Financial years are calculated as the simple (arithmetic) average of quarters from the September quarter to the June quarter of the financial year. The following example illustrates the method of calculating the change in the financial year index for the All Groups CPI between the financial years 2015/16 and 2016/17:
All Groups CPI, weighted average of eight capital cities (2011/12) = 100.0
All Groups CPI, Financial year 2015/16
All Groups CPI, Financial year 2016/17
The change in index points can be calculated by subtracting the two price indexes from the different time periods. The percentage change can be calculated by dividing the change in index points by the earlier time period price index multiplied by 100.
Note that the Change in index points and the Percentage change are different measures of change and usually differ. For more information on interpreting index numbers, refer to A Guide to the Consumer Price Index: 17th Series, 2017 (cat. no. 6440.0), Section 3 "Using the CPI".
Q. What index should I use for contract escalation?
A. There are a range of contracts which use price indexes to adjust payments and/or charges to take account of changes in price inflation. Although the ABS acknowledges that the various price indexes it publishes are used in indexation clauses, it neither endorses nor discourages such use.
The ABS is the central statistical authority for the Australian government. Its role includes a requirement to publish price index data, and to broadly explain the underlying methodology and general limitations of such data. The ABS may provide information about what price indexes are published by it, but will not recommend or comment on the use (or otherwise) of the price indexes. In addition, the ABS does not advise, comment or assist in preparing or writing contracts, nor does it provide advice on disputes arising from contract interpretation.
The ABS has prepared information for users that sets out a range of issues that should be taken into account by parties considering an indexation clause in a contract using an ABS published price index. This paper Use of Price Indexes in Contracts is available on the ABS website. The latest CPI data is available in Consumer Price Index, Australia (cat. no. 6401.0).
Q. Can I compare price levels using price indexes?
A. No. Price indexes, such as the CPI are series constructed specifically to measure changes in prices over time. It is important to note that these indexes are not appropriate for measuring price differences between two separate cities. For example, the capital city consumer price indexes measure price movements over time in each city individually relative to a common reference period. They do not measure differences in retail price levels between cities.
In the June quarter 2017, the All Groups CPI was 111.7 for Sydney and 111.0 for Melbourne. This means that since the reference period 2011/12, prices in Sydney have increased more than Melbourne. This does not mean price levels are necessarily higher or lower in Sydney than Melbourne.
Q. Why doesn't the ABS adjust the CPI when there are one-off price spikes (like bananas, or introduction of the GST)?
A. On a quarter to quarter basis, the prices of items can be impacted by a number of factors including exchange rates, supply constraints, specials (being introduced or withdrawn), natural disasters and seasonal patterns. These factors cannot always be readily quantified but they can have a real impact on the price of the items selected in the basket, so their impact can also be seen in the CPI.
Q. How was child care calculated in September quarter 2020 and June quarter 2020?
A. In response to COVID-19, the Australian Government introduced a policy which resulted in Australian households receiving free child care. The impact of this policy has created significant volatility in the Australian CPI. Below is an explanation of how child care is calculated for these two quarters.
Child care has a weight of 1.17% in the CPI.
In the June quarter 2020 the child care expenditure class decreased 95%. This was due to the introduction of free child care by the Australian Government. The quarterly percentage change can be calculated by dividing the change in index points by the previous period price index multiplied by 100.
The following outlines the method of calculating the fall of 95% in child care in the June quarter 2020.
Child care, Weighted average of eight capital cities (2011/12 = 100.0)
March 2020 to June 2020 quarter Child care series
In the September quarter 2020 child care fees for Australian households returned to their pre-COVID-19 rate having been free during the June quarter. This resulted in a 1381.6% increase. Using the same method as above, the following outlines the calculation of the September quarter 2020 child care percentage movement.
June 2020 to September 2020 quarter Child care series
The fall and rise of the child care series in the CPI is illustrated in the following chart. The cumulative change over the June and September 2020 quarters is a fall of 26.3%.
Child care index in the CPI (2011-12 = 100.0)
ANALYTICAL MEASURES OF INFLATION
Q. Is the CPI seasonally adjusted?
A. No, the headline CPI is not seasonally adjusted because it is never revised (apart from exceptional circumstances). However, the ABS produces an analytical series, 'All groups CPI, seasonally adjusted' which is calculated by applying seasonal adjustment to the expenditure class components of the CPI which are found to be seasonal, and then aggregates the seasonally adjusted and non-seasonally adjusted components, using the weighting pattern at the weighted average of eight capital cities level. As the seasonal adjustment process is based on concurrent seasonal adjustment, the All groups CPI, seasonally adjusted estimates will be subject to revision. More information about seasonal adjustment can be found in Information Paper: Seasonal Adjustment of Consumer Price Indexes, 2011 (cat. no. 6401.0.55.003).
Q. What is the difference between the "headline inflation" and the "underlying inflation" reported in the media?
A. The ABS publishes "headline inflation", the All Groups CPI, weighted average of eight capital cities as well as a range of sub components and analytical measures. Two of these analytical trend measures, the Trimmed mean and Weighted median, are commonly termed "underlying inflation".
The All Groups CPI measures the change in price of the entire CPI basket including any price shocks up or down (e.g. price spikes caused by supply constraints or a change in government subsidies or taxes). The Trimmed mean and Weighted median series are part of the suite of analytical measures of the CPI. They aim to remove volatility observed in the quarterly price change of the original CPI caused by seasonal and irregular price movements to estimate the underlying inflation trend.
For more information on underlying inflation, refer to Information Paper: Seasonal Adjustment of Consumer Price Indexes, 2011 (cat. no. 6401.0.55.003).
Q. The ABS previously published average retail prices for selected items for each capital city. Why are they no longer available?
A. The ABS undertook a major review of the CPI in 2010 and announced changes to ensure the CPI continues to meet the requirements of the Australian community. This review determined that the Average Retail Prices (ARP) data neither performs the function of showing price change over time (temporal measure) nor a detailed price level comparison between capital cities (spatial measure) in an unbiased, robust manner.
For more information on ceasing the publication of average retail prices, refer to the Introduction within the Analytical Series section of Outcomes of the 16th Series Australian Consumer Price Index Review, Dec 2010 (cat. no. 6469.0).
Q. What information is published with the CPI?
A. Consumer Price Index, Australia (cat. no. 6401.0) includes a range of commentary and analysis for users in 'Main contributors to change' and 'Capital cities comparison' each quarter. In addition, the CPI includes a printable pdf publication and a number of Excel workbooks available in the 'Downloads' tab that contain price indexes, percentage changes, and contributions to change that covers:
These items are available for the eight State and Territory capital cities, and for the weighted average of the eight capital cities. A complete list of the CPI groups, sub-groups and expenditure classes is contained in tables 6 and 7 in Consumer Price Index, Australia (cat. no. 6401.0).
Various series are presented in this publication which are helpful for analytical purposes, including:
For further information, explore the various downloadable files (Adobe Acrobat pdf file and Microsoft Excel time series spreadsheets) from the 'Downloads' tab for Consumer Price Index, Australia (cat. no. 6401.0), or refer to the publications available in the 'Related Information' tab.
Q. What if I want more detailed information?
A. The most detailed CPI information the ABS publishes is at the 'Expenditure class' level, for each State and Territory capital city. The ABS includes information about expenditure weights but does not publish data below this level. While the quantity weights are held constant at the expenditure class level, the weights of products within an expenditure class (e.g. different types of bread) can be varied between periodic reviews to reflect changed purchasing patterns. Any weight changes are introduced into the CPI in such a way as to not affect the level of the index.
For each Expenditure class, a brief indication of typical items that are priced is available in A Guide to the Consumer Price Index: 17th Series, 2017 (cat. no. 6440.0), Appendix 2 " Examples of goods and services priced in the 17th Series CPI". Additional information about the types of outlets or sources of pricing information, as well as challenges with price collection is available in Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 8 "Price collection".
Q. What are some limitations of the CPI?
A. The CPI is subject to both limitations in application and limitations in measurement.
The CPI is designed to measure inflation for Australian metropolitan households and thus may not accurately reflect the experience of people living in rural areas. Also, the CPI cannot be used to measure differences in price levels or living costs between one place and another; it only measures changes in prices over time. A higher index for one area does not necessarily mean that prices are higher there than in another area with a lower index. It means that prices have risen faster in the area with the higher index since the two areas' common reference period.
The CPI uses a fixed basket which does not take into account people's substitution to relatively cheaper goods and services which is part of a cost-of-living index. The upper level (expenditure class) weights are updated annually with the introduction of the 17th series CPI in the December quarter 2017. Additionally, the ABS has implemented multilateral methods for 28 ECs, which weight products at the elementary level using expenditure shares. These enhancements mitigate the impact of the substitution effect.
Sampling error. Because the CPI measures price changes based on a sample of items, the published indexes may differ from what the results would be if every transaction by households were used to compile the index. Sampling errors are limitations on the accuracy of the index, not mistakes in calculating the index.
Non-sampling errors. Non-sampling errors are caused by problems of price data collection, logistical lags in conducting surveys, difficulties in defining basic concepts and their operational implementation, and difficulties in handling the problems of quality change. Non-sampling errors can be far more hazardous to the accuracy of a price index than sampling errors, so the ABS expends much effort to minimise these errors. ABS staff are trained to ensure the comparability of the quality of items from period to period, collection procedures are extensively documented, and there is a rolling program to confirm the continued representativeness of the items being sampled. In addition, the ABS has an ongoing research program to monitor and identify new/better sources of information (expenditure weights and price observations) and methodologies.
For more information, refer to Consumer Price Index: Concepts, Sources and Methods (cat. no. 6461.0), Chapter 11 "Maintaining the relevance of the consumer price index".
Q. Will the CPI be updated in the future?
A. Yes. The CPI is regularly updated to reflect changes in consumer buying habits, or shifts in population distribution and demographics. The ABS conducts a major review of the CPI approximately every six years to take advantage of data from the updated Household Expenditure Survey (HES). The most recent update occurred in the December quarter 2017 using 2015/16 HES data. The HES allows the ABS to monitor and implement changes in the expenditure patterns of consumers. From 2018 the CPI weights will be updated annually using Household Final Consumption Expenditure data. The ABS is continually updating the price samples and expenditure patterns below the published level to ensure it represents current expenditure by households, and researching improved statistical methods.
From the introduction of the 17th series CPI in the December quarter 2017, the CPI is re-weighted annually in December quarters. In the years where HES data is not available, Household Final Consumption Expenditure (HFCE) estimates from the National Accounts are used as the primary data source to update the upper level expenditure patterns.
For further information about the most recent updates to the CPI, refer to Information Paper: Introduction of the 17th Series Australian Consumer Price Index, 2017 (cat. no. 6470.0.55.001) and Information Paper: Introduction of the Consumer Price Index Weight Update, 2018 (cat. no. 6470.0.55.002).
Q. How can I get information on the CPI?
A. Free access to all published CPI data is available on the ABS website (www.abs.gov.au). If you require more detailed information, or would like to speak to someone about the CPI, call the National Information and Referral Service on 1300 135 070, or email firstname.lastname@example.org
This phone service also provides an option to listen to a recording of the latest CPI headline information.
We also recommend the following products for further information:
INTRODUCTION OF CARBON PRICING
Q. Does the ABS produce a carbon exclusive Consumer Price Index (CPI) and/or Living Cost Indexes?
A. The Consumer Price Index (CPI) measures price change for consumption goods and services acquired by Australian resident households. The Australian Government repealed carbon pricing with effect from 1 July 2014. It is not possible to quantify the impact of removing the carbon price on the price change measured by the CPI.
Q. How was the carbon price reflected in the CPI and/or Living Cost Indexes?
A. The CPI and Living Cost Indexes measure changes in the prices paid by Australian households, including any taxes payable on goods and services. Therefore, any changes in the prices paid by Australian households as a result of the introduction of the carbon price have been reflected in the CPI and Living Cost Indexes.
WHAT ROLE DOES HOUSING PLAY IN THE CPI
Q. Does the ABS include housing in the CPI and/or Living Cost Indexes?
A. Housing plays an important role in the calculation of the CPI with almost 23 per cent of all spending by Australian households being directed towards housing. This data is sourced from the Household Expenditure Survey and other ABS sources, including the National Accounts. Almost 8 per cent of all household spending is directed towards the purchase of a new dwelling, while rents attract around 7 per cent of total spending by households. Maintenance and property charges and utilities (including electricity, gas and water) account for almost 8 per cent of household spending.
Of note, land is excluded from the calculation of the Australia CPI. This approach aligns with the primary purpose of the CPI as a macroeconomic indicator (as the purchase of land is considered an investment rather than consumption); and international statistical standards. Land and the dwelling for both new and established houses are included in the calculation of the ABS Selected Living Cost Indexes (SLCIs).
The ABS produces a range of other indexes that are better suited to assessing changes in the cost-of-living of Australian households.
The SLCIs are particularly suited to assessing whether or not the disposable incomes of households have kept pace with price changes. This is because the underlying concepts and products priced are designed to answer the question 'By how much would after tax money incomes need to change to allow households to purchase the same quantity of consumer goods and services that they purchased in an earlier period?'
Housing plays an important role in the compilation of the ABS living-cost indexes. In particular, the SLCIs measure the total price of the dwelling including land; as well as changes to mortgage interest charges, to determine if housing living costs have changed. The SLCIs are the most appropriate measures to determine if the cost-of-living of Australian households have changed over time.
For more information see the feature article What role does housing play in the Consumer Price Index and Selected Living Cost Indexes?