Australia Makes Changes To Consumer Price Index
The Australian Bureau of Statistics has announced the outcome from a comprehensive review of the Consumer Price Index (CPI).
“The ABS has decided to make a number of important changes to the CPI”, said Brian Pink, Australian Statistician. “This has been a highly transparent review with the ABS taking into account views from a broad cross section of the community”.
“My thanks go to all those who participated in a review that will help shape the CPI for the future,” Mr Pink said. “In particular, I would like to thank the members of the CPI Review advisory group, chaired by Prof. Kevin Fox of the University of New South Wales.”
This was the first major review of the CPI in over a decade. “The openness of this review facilitated a lively discussion about the concepts, methods and data sources that make up the CPI.
This ensured that we had a comprehensive understanding of the needs of the community before we made important decisions on a main economic indicator”, Mr Pink said.
Key outcomes from the review include:
- Endorsement of the principal purpose of the CPI as a general measure of household inflation. The current conceptual approach to measuring the CPI will be retained
- The ABS acknowledges that the CPI is used for many purposes, so the current suite of living cost indexes will continue. Where there is a clearly demonstrated need, and funding provided, other complementary quarterly price indexes will be produced for particular population subgroups
- From the September quarter 2011, the indirectly measured component of financial services will be removed from the headline CPI until such time that methods and data sources are sufficiently robust for reintroduction to the CPI. A new analytical series, comprising the All groups CPI inclusive of indirectly measured financial services, will be published
- The publication Average Retail Prices of Selected Items, Eight Capital Cities (cat. no. 6403.0.55.001) will be discontinued after the June quarter 2011 issue
Implementation of other key outcomes would involve additional costs and appropriate funding is required before they can be progressed.
These include:
- production of a high quality CPI monthly rather than quarterly, as at present, to support more timely and responsive economic management
- increasing the frequency with which expenditure weights are updated, from 6 yearly to 4 yearly, to mitigate the risks arising from potential upward bias in the index
Topics: 2010, accountability, Advisory Group, Australia, Australian Bureau of Statistics, Brian Pink, business, community, consumer price index, CPI, economic development, economic growth, economic indicator, Economy, employment, finance, Governance, government, inflation, investment, jobs, living cost indexes, moniter, monitor, news, open government, population, quarterly price indexes, transparency
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