6401.0 - Consumer Price Index, Australia, Dec 2015 Quality Declaration 
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FEATURE ARTICLE: AUSTRALIAN DIETARY GUIDELINES PRICE INDEXES


INTRODUCTION

The Australian Bureau of Statistics (ABS), in partnership with the Department of Health, has analysed historical Consumer Price Index (CPI) data with reference to the 2013 Australian Dietary Guidelines (ADG) food groups to construct new ADG Price Indexes (ADGPIs). This partnership project aims to inform the community about long term price change for food and beverages.

The CPI is an important economic indicator. It measures price change facing households by providing a general measure of change in prices of consumer goods and services purchased in Australia's eight capital cities.

The ADG provide evidence-based advice on the amount and types of food that Australians should eat for good health, maintenance of a healthy body weight and the prevention of chronic conditions such as heart disease, cancer and diabetes. Aligning CPI food and beverage data with the ADG food groups forms part of the picture required to underpin food and nutrition policy making and research. This suite of indexes is not intended to be published on an ongoing basis.

Further information on the ADG can be found at www.eatforhealth.gov.au. Interested readers may also wish to refer to the publications under the broader Australian Health Survey, available on the ABS website. This survey provides data on many health topics, including food consumption and nutrient intakes in Australia.


METHODOLOGY

The simplest way of thinking about the CPI and the ADGPIs is to imagine a basket of goods and services comprising items bought by average Australian households. As prices change, so too will the total price of the basket of goods and services. The CPI measures the changes in the total price of this fixed basket over time. The ADGPIs use a subset of the CPI basket to measure only the price changes in food and beverages.

Products in the CPI basket are classified primarily around their purposes (e.g. nuts are classified as 'snacks and confectionery' in the CPI because they tend to be consumed as snacks). In consultation with the Department of Health, CPI data have been re-classified to the ADG food groups to produce the ADGPIs (e.g. nuts are re-classified as 'meats and alternatives' for their nutritional value) for the purpose of this analysis. The ADG food groups used in the development of the ADGPIs were:

  • Grain (cereal) foods; mostly wholegrain and/or high cereal fibre varieties
  • Vegetables and legumes/beans
  • Fruit
  • Milk, yoghurt, cheese and alternatives, mostly reduced fat
  • Lean meats and poultry, fish, eggs, tofu, nuts, seeds
  • Discretionary food items (foods considered to be of little nutritional value and which tend to be high in saturated fats, sugars, salt and/or alcohol)
  • Oils and unsaturated fats

For the purpose of this analysis 'ADG food groups' refers to the first five core food groups, which are an important part of a healthy diet, as well as the two non-core categories in 'discretionary' and 'oils and fats'.

Examples of some of the products included in the ADG food groups are available in Appendix 1. Readers should note that not all foods could be readily re-classified to the ADG groups e.g. 'restaurant meals' and 'take away and fast foods' are analysed separately in Appendix 3, and are not reflected in the main article.

CPI data have been used for each capital city and the weighted average of the eight capitals (i.e. a national average). All figures presented in this paper are for the weighted average of the eight capital cities. All figures are calculated using calendar year averages - e.g. price change between 2001 and 2014 is the change between the average price index for 2001 and the average price index for 2014. All figures are rounded to one decimal place.

Similar to the CPI, the ADGPIs measure the rate of price change rather than the price level, and cannot be used to compare price levels between cities or groups. Selected CPI rates of price change are provided in Appendix 2 for comparison to ADGPIs.


Weights

The CPI applies weights to different products to measure the average price change of the basket. For example a change in the price of bread will have a greater impact on the CPI basket than would the same change in the price of table salt. In practice this is done by applying different weights for each product based on their respective shares of household expenditure.

Similarly, smaller cities (in expenditure terms) are given smaller weights than larger ones. CPI and ADGPI weights are derived from the Household Expenditure Survey (cat. no. 6530.0), available on the ABS website, and updated as appropriate.

Table 1 compares the relative weight of each ADG food group. This analysis shows that 'discretionary food items' account for over half of consumers' spending on food in all periods, whilst 'fruit' and 'vegetables' account for around 15%. The ADGPI weighting patterns differ from equivalent categories in the CPI food and non-alcoholic beverages group due to the re-classification of products.

Table 1 - ADGPI food group weights

2001
2014
(%)
(%)

Grains & cereals
7.6
6.3
Vegetables
7.4
9.4
Fruit
7.2
7.5
Milk & alt.
7.4
6.0
Meats & alt.
13.0
11.8
Discretionary
56.5
58.2
Oils & fats
0.9
0.8




RESULTS

Table 2 presents the average annual rates of price change for each group. Prices grew in every group over the fourteen year period 2001 to 2014. Four out of seven ADG food groups grew faster than the CPI (2.7% per year) with 'vegetables' experiencing the fastest average annual rate of price change (3.8%). 'Grains and cereals', 'milk and alternatives' and 'meats and alternatives' saw slower average annual rates of price change than the CPI.

Table 2 - Average Annual Rates of Price Change

2001-14
Rate (%)

Grains & cereals
2.4
Vegetables
3.8
Fruit
3.0
Milk & alt.
2.5
Meats & alt.
2.2
Discretionary
3.0
Oils & fats
2.9
CPI
2.7
CPI Food group
2.9

Figure 1: Total Price Change 2001-2014
Graph: Figure 1: Total Price Change 2001–2014


The average annual rates of price change were strongest in the period 2001 to 2010, and all ADG food groups were above the CPI (2.9% per year). The fastest average annual rate of price change among the ADG food groups during the period 2001 to 2010 was seen in 'oils and fats' (4.7%), followed by 'milk and alternatives' (4.2%) and 'vegetables' (3.9%). An influence on food prices during this period was the drought of the early 2000s.

Cyclones Larry (2006) and Yasi (2011) caused banana prices to rise rapidly. This was followed by rapid returns to normal price levels. The effects of the cyclones dominated the ADG 'fruit' group during these periods.

Figure 2: Total Price Change 2001-2010
Graph: Figure 2: Total Price Change 2001–2010


Over the most recent five years, average annual rates of price change have slowed, with some groups even recording negative price change. Figure 3 shows that the ADG 'oils and fats', 'milk and alternatives', 'grains and cereals', and 'meats and alternatives' groups were relatively unchanged between 2010 and 2014. Influential factors during this period may have included the drought abating and supermarket price competition in some areas (e.g. bread, milk and beef prices).

Figure 3: Total Price Change 2010-2014
Graph: Figure 3: Total Price Change 2010–2014


The CPI food and non-alcoholic beverages group saw a corresponding slowing of its average annual rate of price change to 1.6% between 2010 and 2014, which was less than prices in the broader economy (average annual growth in the CPI was 2.5%). 'Vegetables' and 'fruit' prices still grew faster (3.6% and 2.8% respectively) than overall CPI.

International factors have contributed towards trends in food prices in Australia over the period 2001 to 2014. Potential influences may have included the growing demand from emerging nations and the global financial crisis impacting agricultural commodity prices.

The full dataset of quarterly index numbers for the ADGPIs is available from the ABS website.


APPENDIX 1

Table 3: Examples of Products Included in ADG Food Groups

ADG food groupExamples of products included

Grains & cereals Bread
Breakfast cereals
Pasta
Rice
Vegetables Fresh vegetables
Frozen vegetables
Canned vegetables
Fruit Fresh fruit
Dried fruit
Canned fruit
Milk & alt. Milk
Cheese
Yogurt
Meats & alt. Beef
Eggs
Veal
Lamb
Poulty
Fresh fish
Nuts
Discretionary Alcohol
Biscuits
Butter
Cakes
Chocolates
Cocoa and chocolate-based powders
Gum
Honey
Ice-cream
Jams
Lollies
Potato chips
Processed meats
Salt
Sauces and condiments
Soft drinks
Sugar
Water based ice confectionery
Oils & fats Margarine
Other vegetable oils




APPENDIX 2

Table 4: Selected CPI Average Annual Rates of Price Change

2001-14
Rate (%)

FOOD AND NON-ALCOHOLIC BEVERAGES
2.9
Bread and cereal products
2.6
Bread
2.6
Cakes and biscuits
2.7
Breakfast cereals
1.9
Other cereal products
2.5
Meat and seafoods
2.3
Beef and veal
2.1
Pork
2.3
Lamb and goat
3.8
Poultry
0.9
Other meats
3.1
Fish and other seafood
2.2
Dairy and related products
2.4
Milk
1.5
Cheese
4.1
Ice cream and other dairy products
1.8
Fruit and vegetables
3.6
Fruit
3.3
Vegetables
3.8
Food Products n.e.c
2.7
Eggs
2.6
Jams, honey and spreads
3.2
Food additives and condiments
1.8
Oils and fats
3.6
Snacks and confectionery
3.1
Other food products n.e.c.
1.9
Non-alcoholic beverages
2.9
Coffee, tea and cocoa
1.4
Waters, soft drinks and juices
3.2
Meals out and take away foods
3.3
Restaurant meals
3.1
Take away and fast foods
3.5
ALCOHOL AND TOBACCO
4.6
Alcoholic beverages
3.0
Spirits
3.9
Wine
1.2
Beer
3.9




APPENDIX 3

'Restaurant meals' and 'take away and fast foods' could not be included in the overall ADGPI analysis because many meals are combinations of multiple ADG food groups. For example the ingredients for a ham and pineapple pizza can include bread, tomato paste, pineapple, cheese, ham, sauce and oil. In other words, just one pizza can have elements of every ADG group. Thus, analysing price change in 'restaurant meals' and 'take away and fast foods' within an ADG framework is impractical. Although 'restaurant meals' and 'take away and fast foods' are not applicable to the ADG food groups, they represent a significant portion of consumers' spending on food and beverages. If they were included in the ADGPI weights comparison, they would make up approximately 25% of the total. As such, they warrant an individual analysis.

Table 5: ADGPI Food Group Weights (including prepared meals)

2001
2014
(%)
(%)

Grains & cereals
5.8
4.6
Vegetables
5.6
6.8
Fruit
5.5
5.5
Milk & alt.
5.7
4.3
Meats & alt.
10.0
8.6
Discretionary
43.4
42.3
Oils & fats
0.7
0.6
CPI Restaurants
9.6
14.0
CPI Take away
13.7
13.3



Prices in 'restaurant meals' and 'take away and fast foods' have grown as fast as the CPI 'food and non-alcoholic beverages' group. The trends in 'restaurant meals' and 'take away fast foods' prices tend to track closely to those of wages in 'accommodation and food services' Wage Price Index, (cat. no. 6345.0) available on the ABS website. 'Restaurant meals' and 'take away and fast foods' establishments involve a much larger service component (chefs, wait staff, dish cleaners, running cooking appliances etc.) than food purchased at supermarkets and grocery stores.

Table 6: Average Annual Rates of Price Change (including prepared meals)

2001-14
Rate (%)

Grains & cereals
2.4
Vegetables
3.8
Fruit
3.0
Milk & alt.
2.5
Meats & alt.
2.2
Discretionary
3.0
Oils & fats
2.9
CPI
2.7
CPI Food group
2.9
CPI Restaurants
3.1
CPI Take away
3.5
WPI Accom. & food
2.9