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6401.0 - Consumer Price Index, Australia, Dec 2012 Quality Declaration 
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APPENDIX SEASONAL ADJUSTMENT OF THE CPI


INTRODUCTION

1 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 Easter or the proximity of significant days in the year (e.g. Christmas). 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.

2 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. Concurrent seasonal adjustment is technically superior to the more traditional method of reanalysing seasonal patterns once each year because it uses all available data to fine tune the estimates of the seasonal component each quarter. With concurrent analysis, the seasonally adjusted series are subject to revision each quarter as the estimates of the seasonal factors are improved. 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 September quarter 2011 then the most significant revisions will be to June quarter 2011 and September quarter 2010). The seasonal patterns are also reanalysed on an annual basis or when there are known changes to regular events. This can lead to additional revisions.

3 Autoregressive integrated moving average (ARIMA) modelling can improve the revision properties of the seasonally adjusted and trend estimates. ARIMA modelling relies on the characteristics of the series being analysed to project future period data. The projected values are temporary, intermediate values, that are only used internally to improve the estimation of the seasonal factors. The projected data do not affect the original estimates and are discarded at the end of the seasonal adjustment process. From the December quarter 2012, the Consumer Price Index uses ARIMA modelling where appropriate for individual time series. The ARIMA model is assessed as part of the annual re-analysis. For more information on ARIMA modelling see Feature article: Use of ARIMA modelling to reduce revisions in the October 2004 issue of Australian Economic Indicators (cat. no. 1350.0).

4 The ABS applies 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 to calculate the All groups CPI, seasonally adjusted, Trimmed mean and Weighted median estimates. The seasonally adjusted expenditure class components are available in Table 15 - CPI expenditure class, seasonally adjusted index numbers, weighted average of eight capital cities. The seasonal factors used to derive these seasonally adjusted indexes are available in Table 16 - CPI expenditure class, combined seasonal adjustment factors, weighted average of eight capital cities.


SEASONALITY OF CPI EXPENDITURE CLASSES

5 The Annual Seasonal Re-analysis (ASR) uses a range of statistical tests to determine if seasonality was present in each expenditure class price index. This approach identifies series that show seasonal patterns over any part of the series. Using the ABS seasonal adjustment methodology, 62 of the 87 expenditure class price indexes were originally deemed to have a seasonal pattern in the 16th series review.

6 Following the 2012 ASR, 58 expenditure classes are considered seasonal and will be seasonally adjusted for the Analytical series; 'All Groups CPI, seasonally adjusted' and 'Underlying trend series - Trimmed mean and Weighted median'. Seasonally adjusted index numbers can be found in 'TABLE 15. CPI: Expenditure Class Index Numbers, Seasonally adjusted, Weighted Average of Eight Capital Cities' and combined seasonal adjustment factors can be found in 'TABLE 16. CPI: Expenditure Class, Combined seasonal adjustment factors, Weighted Average of Eight Capital Cities'. These tables can be downloaded from the 'Downloads' tab of this issue on the ABS website
<http://www.abs.gov.au>.

7 For more details on the seasonal adjustment of the CPI please refer to Information Paper: Seasonal Adjustment of Consumer Price Indexes, 2011 (cat. no. 6401.0.55.003).

Table 1 - Seasonal adjustment of CPI expenditure classes

CPI expenditure classes
Seasonally adjusted prior to 2012
Annual Seasonal Reanalysis (ASR)
Seasonally adjusted following
2012 ASR

Bread
n
n
Cakes and biscuits
y
y
Breakfast cereals
y
y
Other cereal products
y
y
Beef and veal
y
y
Pork
y
y
Lamb and goat
y
y
Poultry
y
(a)n
Other meats
y
y
Fish and other seafood
y
y
Milk
y
(a)n
Cheese
n
n
Ice cream and other dairy products
y
y
Fruit
y
y
Vegetables
y
y
Eggs
n
n
Jams, honey and spreads
n
n
Food additives and condiments
y
y
Oils and fats
n
n
Snacks and confectionery
y
y
Other food products n.e.c.
y
y
Coffee, tea and cocoa
n
n
Waters, soft drinks and juices
y
y
Restaurant meals
n
n
Take away and fast foods
y
y
Spirits
n
n
Wine
y
(a)n
Beer
n
n
Tobacco
y
y
Garments for men
y
y
Garments for women
y
y
Garments for infants and children
y
y
Footwear for men
y
(a)n
Footwear for women
y
y
Footwear for infants and children
y
y
Accessories
y
y
Cleaning, repair and hire of clothing and footwear
n
n
Rents
y
y
New dwelling purchase by owner-occupiers
n
n
Maintenance and repair of the dwelling
y
y
Property rates and charges
y
y
Water and sewerage
y
y
Electricity
y
y
Gas and other household fuels
y
y
Furniture
y
y
Carpets and other floor coverings
y
y
Household textiles
y
y
Major household appliances
n
n
Small electric household appliances
y
y
Glassware, tableware and household utensils
y
y
Tools and equipment for house and garden
y
y
Cleaning and maintenance products
y
y
Personal care products
y
y
Other non-durable household products
y
y
Child care
y
y
Hairdressing and personal grooming services
n
n
Other household services
n
n
Pharmaceutical products
y
y
Therapeutic appliances and equipment
n
n
Medical and hospital services
y
y
Dental services
y
y
Motor vehicles
n
n
Spare parts and accessories for motor vehicles
n
n
Automotive fuel
y
y
Maintenance and repair of motor vehicles
n
n
Other services in respect of motor vehicles
y
y
Urban transport fares
y
y
Postal services
n
n
Telecommunication equipment and services
n
n
Audio, visual and computing equipment
n
n
Audio, visual and computing media and services
n
n
Books
y
y
Newspapers, magazines and stationery
y
y
Domestic holiday travel and accommodation
y
y
International holiday travel and accommodation
y
y
Equipment for sports, camping and open-air recreation
n
n
Games, toys and hobbies
y
y
Pets and related products
y
y
Veterinary and other services for pets
y
y
Sports participation
y
y
Other recreational, sporting and cultural services
y
y
Preschool and primary education
y
y
Secondary education
y
y
Tertiary education
y
y
Insurance
y
y
Deposit and loan facilities (direct charges)
n
n
Other financial services
n
n

(a) See paragraph 8 for dates from when seasonal adjustment ceased.


8 The following series have ceased being seasonally adjusted, with no clear identifiable seasonal pattern in recent years:
  • Footwear for men from the March quarter 2007;
  • Milk from the March quarter 2010;
  • Poultry from the June quarter 2009; and
  • Wine from the March quarter 2009.

9 The following series have had adjustments introduced due to changes in trend:
  • Electricity from the September quarter 2012;
  • Gas and other household fuels from the September quarter 2012;
  • Maintenance and repair of motor vehicles from the June quarter 2012;
  • Medical and hospital services from the September quarter 2012; and
  • Water and sewerage from the September quarter 2012.

10 The following series has had adjustments introduced due to changes in seasonal pattern:
  • Water and sewerage from the September quarter 2011.

11 Changes to the seasonally adjusted series do not affect the original CPI index series.


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