Overview

Scope

All consumption goods and services purchased by households in capital cities.

Geographical coverage

Data are available as a weighted average of capital cities and for individual capital cities.

Source

Pricing samples are taken for a range of good and services from a sample of retail outlets.

Transactions data from some outlets are also recorded.

Collection method

Information used to calculate the CPI is collected from:

  • personal visits to retailers
  • online and telephone calls
  • administrative data, including transactions data

Concepts, sources and methods

Descriptions of the underlying concepts and methods used are available in Consumer Price Index: Concepts, Sources and Methods, 2018.

History of changes

From the December quarter 2017, the CPI is re-weighted annually.

More about collection history

How the data is collected

  • The Consumer Price Index (CPI) measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (metropolitan households). This 'basket' is based on actual household expenditure data, which is principally derived from the Household Expenditure Survey (HES) conducted by the ABS.

    The basket is divided into the following eleven groups:

    • Food and non-alcoholic beverages
    • Alcohol and tobacco
    • Clothing and footwear
    • Housing
    • Furnishings, household equipment and services
    • Health
    • Transport
    • Communication
    • Recreation and culture
    • Education
    • Insurance and financial services.
  • Metropolitan households are defined as those falling under the 2011 Australian Statistical Geography Standard (ASGS) Greater Capital City Statistical Areas. Capital City indexes are produced in addition to the All Groups CPI, and measure price movements over time in each city individually.

  • There are 87 expenditure classes (groupings of like items) in the 17th series CPI and each expenditure class has its own weight, or measure of relative importance. In calculating the index, price changes for the various expenditure classes are combined using these weights. The weighting pattern for the CPI is updated annually, in each December quarter. The most recent weighting pattern can be found in Information Paper: Introduction of the Consumer Price Index Weight Update, 2018.

    The HES is used to re-weight the CPI in the years where it is available, currently six-yearly. It collects detailed information about the expenditure, income, assets, liabilities and household characteristics from a sample of households in the eight capital cities. In inter-HES years, Household Final Consumption Expenditure (HFCE) data from the National Accounts is used as the primary data source for updating the weights.

    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.

    Prior to the introduction of the 17th series CPI in December 2017 the CPI weights were updated at approximately six yearly intervals. Historical weighting patterns can be found in in Consumer Price Index: Historical Weighting Patterns, 1948 - 2017.

    For more information, refer to Consumer Price Index: Concepts, Sources and Methods, Chapter 6 "Weights and their sources", and Consumer Price Index: Correspondence with 2015-16 Household Expenditure Classification, Australia, 2017.

    For information on the HES, refer to Household Expenditure Survey, Australia: Summary of Results, 2015-16.

  • Frequency of price collection varies by item depending on the volatility of each item. Less volatile items may have prices collected once per quarter, while more volatile items may have prices collected at least once per month. Transactional data is used where available, with revenue and quantity data collected on a weekly basis. Web-scraped data also provides more regular insight into price movements. A few items see price change at regular, infrequent intervals, such as education fees and property rates where prices are set once per year. In these cases, the frequency of price collection is modified accordingly.

    Items priced on a quarterly basis are always priced in the same month of each quarter. For example, items for which prices are collected in the first month of the September quarter, July, are also priced in the first month of subsequent quarters, namely October, January and April.

  • Transactional data accounts for approximately 25 per cent of the Australian CPI and is predominantly used for food and non-alcoholic beverages, tobacco, automotive fuel, and non-durable household goods. Transactional data was first used in the CPI the March quarter 2014. In December quarter 2017 use of the multilateral index method for transactional data was introduced. This 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 Chapter 15 "Use of transactions data in the Australian CPI".

    Where transactional data is not available or appropriate, the collection of prices in each capital city is carried out by trained ABS staff, or received through administrative datasets or special surveys.

    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 are identified to enable the selection of a representative sample of these outlets. 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.

    For more information, refer to Consumer Price Index: Concepts, Sources and Methods, Chapter 7 "Sampling", Chapter 8 "Price collection", and Chapter 10 "Consumer Price Index calculation in practice".

How the data is processed

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. 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 Chapter 4, 'Calculating the CPI'.

  • 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:

    • changes in package size or content of food, such as breakfast cereals;
    • a change in the alcoholic content or size of bottles of spirits;
    • changes to material or detailing of clothing; and
    • changes in motoring performance, economy, comfort, safety or durability of motor vehicles;

    For more information on quality adjustments, refer to Consumer Price Index: Concepts, Sources and Methods, Chapters 8 "Price Collection" and 9 "Quality change and new products".

  • 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 Chapter 5,"Coverage and classifications".

  • The CPI is subject to both limitations in application and limitations in measurement.

    Application

    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. The upper level (expenditure class) weights are updated annually with the introduction of the 17th series CPI in the December quarter 2017, mitigating the impact of this substitution effect, as does the multilateral method used for 28 ECs, which weights products at the elementary level using expenditure shares.

    Measurement

    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, Chapter 11 "Maintaining the relevance of the consumer price index".

  • Movements in indexes from one period to another can be expressed either as changes in index points or as percentage changes. The following example illustrates the method of calculating changes in index points and percentage changes between any two periods:

    All groups CPI: Weighted average of eight capital cities. Index numbers:

    • December Quarter 2018 = 114.1
    • Less December 2017 = 112.1
    • Change in index points = 2
    • Percentage change = 2/112.1 x 100 = 1.8%
  • There are 87 expenditure classes (that is, groupings of like items) in the 17th series CPI and each expenditure class has its own weight, or measure of relative importance. In calculating the index, price changes for the various expenditure classes are combined using these weights.

  • Are done to illustrate three different kinds of movements in index numbers:

    • Movements between consecutive quarters
    • Movements between corresponding quarters of consecutive years
    • Movements between consecutive financial years (where the index numbers for financial years are simple averages of the quarterly index numbers)

    Table 7 provides a detailed analysis, for the weighted average of eight capital cities, of movements in the CPI since the previous quarter, including information on movements for groups, sub-groups and expenditure classes. It also shows the contribution which each makes to the total CPI. For instance, the dairy and related products sub-group contributed 1.11 index points to the total All groups index number of 113.5 for the September Quarter 2018. The final column shows contributions to the change in All Groups index points by each group, sub-group and expenditure class.

  • Published index numbers, except for the underlying trend series, are calculated from index numbers and rounded to one decimal place. Rounding errors can occur, causing discrepancies (e.g. when calculating percentage changes of aggregates and their components). Underlying trend series, 'Trimmed mean' and 'Weighted median' index numbers are published to four decimal places. Percentage change movements are calculated from the published index numbers and rounded to one decimal place.

How the data is released

The CPI is released on the last Wednesday of the month following the relevant quarter.

Information published with CPI

Consumer Price Index, Australia 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 a number of Excel workbooks available in the 'Downloads' tab that contain price indexes, percentage changes, and contributions to change that covers:

  • The top level 'All Groups'
  • 11 groups (e.g. Food and non-alcoholic beverages, Clothing and footwear, Alcohol and tobacco, Health, Insurance and financial services)
  • 33 sub-groups (e.g. Fruit and vegetables, Footwear, Alcoholic beverages, Medical, dental and hospital services, Furniture and furnishings), and
  • 87 expenditure classes (e.g. Fruit, Rents, Beer, Dental services, Child care)

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.

Statistics from Consumer price index

Analytical series - All groups CPI

Various series are presented in this publication to assist users analyse the CPI. Some of the analytical series are compiled by taking subsets of the CPI basket, and most are self-explanatory, such as 'All groups CPI excluding food and non-alcoholic beverages'. Other series and their composition are described below:

  • Comprises all components included in the all groups CPI, seasonally adjusted where seasonality has been identified at the weighted average of eight capital cities level. Seasonal adjustment factors are calculated using the history of price changes up to the current quarter CPI and are revised each quarter. A description of which series are currently seasonally adjusted is published in the Appendix of every December quarter issue of Consumer Price Index, Australia, following the annual seasonal reanalysis. A deeper explanation of seasonal adjustment can be found further down this page.

  • These are two measures of underlying inflation calculated from the June quarter 2002 using standard ABS seasonal adjustment techniques. For more information see the Information Paper: Seasonal Adjustment of Consumer Price Indexes, 2011. The trimmed mean and weighted median are calculated using the distribution of expenditure classes each quarter derived as follows:

    The CPI expenditure classes are ranked from lowest to highest according to the seasonally adjusted percentage change from the previous quarter.

    The seasonally adjusted relative weight of each expenditure class is calculated based on its previous quarter contribution to the All groups CPI.

    The 'Trimmed mean' is calculated by using a weighted average of percentage change from the previous quarter (seasonally adjusted) from the middle 70 per cent of the distribution.

    The 'Weighted median' is calculated using the percentage change from the previous quarter (seasonally adjusted) expenditure class at the 50th percentile of the distribution.

  • Comprises the food and non-alcoholic beverages group (except restaurant meals); alcohol and tobacco group; clothing and footwear group (except cleaning, repair and hire of clothing and footwear); furnishings, household equipment and services group (except domestic and household services sub-group); utilities, audio, visual and computing equipment and services, and newspapers, books and stationery sub-groups; and new dwelling purchase by owner-occupiers, pharmaceutical products, motor vehicles, automotive fuel, spare parts and accessories for motor vehicles, equipment for sports, camping and open-air recreation, games, toys and hobbies and pets and related products expenditure classes.

  • Comprises all items not included in the 'All groups CPI, goods component'. A description of which series are goods or services is published in the Appendix of the December quarter 2017 issue of Consumer Price Index, Australia.

  • One of the outcomes of the 16th series CPI Review was to remove the indirectly measured component of the deposit and loan facilities index from the headline CPI but to include it in a new analytical series. This index includes the 17th series All groups CPI plus the indirectly measured component of the deposit and loan facilities index.

  • In addition to the items excluded from the series 'All groups CPI excluding 'volatile items', also excludes: utilities, property rates and charges, child care, health, other services in respect of motor vehicles, urban transport fares, postal services, and education.

  • Reflecting the changing composition of the CPI, from the September quarter 1989 to the June quarter 1998, comprises the All groups CPI excluding house insurance, house contents insurance, vehicle insurance and mortgage interest charges and consumer credit charges; from the September quarter 1998 to the June quarter 2000 comprises the All groups CPI excluding house insurance, house contents insurance and vehicle insurance; from the September quarter 2000 to the June quarter 2005 comprises the All groups CPI excluding insurance services; from the September quarter 2005 to the June quarter 2011 comprises the All groups CPI excluding financial and insurance services; from the September quarter 2011 comprises the All groups CPI excluding insurance and financial services.

  • Reflecting the changing composition of the CPI, from the September quarter 1989 to the June quarter 1998, comprises the All groups CPI excluding housing, house contents insurance, vehicle insurance and consumer credit charges; from the September quarter 1998 to the June quarter 2000 comprises the All groups CPI excluding housing, house insurance, house contents insurance and vehicle insurance; from the September quarter 2000 to the June quarter 2005 comprises the All groups CPI excluding housing and insurance services; from the September quarter 2005 to the June quarter 2011 comprises the All groups CPI excluding housing and financial and insurance services; from the September quarter 2011 comprises the All groups CPI excluding housing and insurance and financial services.

  • Comprises the All groups CPI excluding the food and non-alcoholic beverages group (except restaurant meals); electricity, gas and other household fuels; and automotive fuel.

  • Comprises the All groups CPI excluding fruit and vegetables and automotive fuel.

  • Comprises all items whose prices are largely determined on the world market.

  • Comprises all items not included in the tradables component.

Seasonally adjusted indexes

Seasonally adjusted estimates are derived by estimating and removing systematic calendar related effects from the original series. In most economic data these calendar related effects are a combination of the classical seasonal influences (e.g. the effect of the weather, social traditions or administrative practices such as government charges increasing on 1 July each year) plus other kinds of calendar related variations, such as Christmas and Easter. In the seasonal adjustment process, both seasonal and other calendar related factors evolve over time to reflect changes in activity patterns. The seasonally adjusted estimates reflect the sampling and non-sampling errors to which the original estimates are subject.

The CPI uses a concurrent seasonal adjustment methodology to derive the adjustment factors. This method uses the original time series available at each reference period to estimate seasonal factors for the current and previous quarters. Because concurrent adjustment uses all available data to improve the estimates of the seasonal component each quarter, seasonally adjusted series are subject to revision. In most instances, the only significant revisions will be to the combined adjustment factors for the previous quarter and for the same quarter in the preceding year as the reference quarter (i.e. if the latest quarter is June quarter 2018 then the most significant revisions will be to March quarter 2018 and June quarter 2017). The seasonal patterns are also reanalysed on an annual basis or when there are known changes to regular events, which may lead to additional revisions.

The ABS applies seasonal adjustment to expenditure class components of the CPI which are found to be seasonal, and then aggregates the seasonally adjusted and non-seasonally adjusted components to calculate the All groups CPI - seasonally adjusted, Trimmed mean and Weighted median estimates. The seasonally adjusted expenditure class components are available in Table 13 - CPI expenditure classes and selected analytical series, seasonally adjusted index numbers, weighted average of eight capital cities. The seasonal factors used to derive these seasonally adjusted indexes are available in Table 14 - CPI expenditure class, combined seasonal adjustment factors, weighted average of eight capital cities. For more information about seasonal adjustment of the CPI please refer to Information Paper: Seasonal Adjustment of Consumer Price Indexes, 2011.

International comparisons

In analysing price movements in Australia, an important consideration is Australia's performance relative to other countries. However, a simple comparison of All groups (or headline) CPIs is often inappropriate because of the different measurement approaches used by countries for certain products, particularly housing and financial and insurance services. To provide a better basis for international comparisons, the 17th International Conference of Labour Statisticians adopted a resolution which called for countries to 'if possible, compile and provide for dissemination to the international community an index that excludes housing and financial services' in addition to the all-items index.

Concepts, sources and methods

See Consumer Price Index: Concepts, Sources and Methods for descriptions of the underlying concepts, structure, sources and methods used in compiling the estimates.

History of changes

CPI original indexes are revised only in exceptional circumstances, such as to correct a significant error. As is the case with all price indexes, the index reference period (i.e. the period in which the index is set equal to 100.0) will be changed periodically. The index number levels for all periods will be changed by this process and it may also result in differences, due to rounding, between the percentage changes published on the old base and those on the new base. Seasonally adjusted indexes (including the Trimmed mean and Weighted median) for some quarters will be revised as extra quarters are included in the series analysed for seasonal influences.

Abbreviations

Abbreviation Definition
CPI Consumer Price Index
HES Household Expenditure Survey
ASGS Australian Statistical Geography Standard
HFCE Household Final Consumption Expenditure