MONTHLY CPI FAQs
The below Frequently Asked Questions are specific to the developmental work and feasibility, conducted by the ABS on a monthly CPI.
For information on the current quarterly CPI please view the, CPI Frequently Asked Question page.
Q. Will the monthly CPI be the same quality as the quarterly CPI?
A. The quality of the monthly CPI will be equivalent to the quarterly CPI.
For approximately 85-90 per cent of the CPI the same source data will be used in the monthly CPI as the existing quarterly CPI, noting that many Expenditure Classes are collected and compiled monthly now. This includes the use of transactions data, web-scraped data, administrative data and manually collected data (e.g. telephone, in-store) on a monthly basis. Additional data collection, primarily using web-scraping is also expected to occur.
For the remaining 10-15 per cent of the CPI, development work will assess methods and data sources to produce a high quality monthly CPI. This assessment will examine how to allocate the sample optimally to determine which quarterly samples need to be increased for the monthly CPI or simply spread across the three months of the quarter.
Q. Will the monthly CPI be more volatile than the quarterly CPI?
A. The availability of new data sources such as transactions data and administrative data, and collection techniques, including web-scraping, means greater coverage of products and retail outlets from which to produce a monthly CPI. The ABS now collects around one million prices each quarter for the CPI. This will increase further to produce a monthly CPI. This level of coverage will ensure a monthly CPI does not contain spurious volatility as a result of a more frequent production.
Consumer prices are relatively dynamic in products such as: automotive fuel; clothing and footwear; fruits and vegetables; and domestic travel airfares and accommodation. A monthly CPI will reflect price change in the same way the quarterly CPI currently does.
Currently users are required to wait an additional three months to see whether a particular movement is a one-off, or the beginning of a change in the inflation trend (e.g. the March quarter 2016 quarterly movement of -0.2%). A monthly CPI will provide an earlier and more frequent indication of price change. This is particularly important in informing monetary policy.
The ABS produces, and will continue to produce, two trend measures to complement headline inflation measures: the Trimmed mean and Weighted median. Figure 1 shows how the trend measures provide an insight into the underlying inflation from a demand point of view. As with the quarterly release, the Weighted median and Trimmed mean will be published on a monthly basis.
Figure 1: Quarterly CPI compared to the Trimmed mean and Weighted median, Mar13 - Mar18
Q. Will there be discrepancies between the monthly CPI and the quarterly CPI?
A. Consistent with current practice where some components of the CPI are already produced monthly, the quarterly outputs will be derived directly from the monthly outputs. The quarterly price indexes will be calculated by taking the average of the three monthly price indexes. The quarterly movements will be derived from the quarterly indexes. This approach ensures the price index movements are consistent between the monthly and quarterly series, subject to small rounding differences.
Table 1 contains a simple example of how the quarterly CPI will be calculated using the monthly indexes.
Table 1: Example of how quarterly CPI is calculated
The quarterly index is calculated by taking the average of the three monthly indexes. For example:
March quarter = (112.0 + 112.1 + 112.6) / 3 = 112.2 (rounded to one decimal place)
Q. What data sources will the monthly CPI use?
A. The Australian CPI distinguishes 87 different Expenditure Classes (ECs). Of the 87 ECs:
- 28 use high frequency transaction data, representing a weight of 16 per cent of the CPI;
- 14 are currently collected monthly, representing a weight of 27 per cent of the CPI;
- 5 only require an annual collection, representing a weight of 8 per cent of the CPI;
To minimise the collection costs of a monthly CPI, the planning phase of this project will focus on reducing as much manual collection as possible and moving the collection to monthly administrative data and high frequency web-scraped data.
Q. Will the ABS publish CPI analytical series on a monthly basis?
A. Included in the quarterly CPI release are a suite of analytical series, these include: seasonally adjusted CPI; Trimmed mean; Weighted median; Tradables; Non-tradables; Goods component; Services component; CPI including deposit and loan facilities (indirect charges); CPI excluding volatile items; and various CPI excluding measures.
These analytical series provide useful insights and different perspectives of inflation. The ABS intends to publish these analytical series on a monthly basis.
Q. Will the monthly CPI be revised?
A. The ABS will not change our revision policy in regards to a monthly CPI, which is CPI original indexes are revised only in exceptional circumstances, such as to correct a significant error.
Q. Will the ABS publish the Selected Living Cost Indexes (ABS cat. no. 6467.0) on a monthly basis?
A. The Living Cost Indexes (LCI) have been 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 the base period?'
The main uses of the LCIs are for indexation purposes for government payments such as the Age Pension. LCIs on a monthly basis are not required for indexation purposes.
At this point in time, the ABS does not intend to publish the Living Cost Indexes on a monthly basis. Users are invited to provide feedback on this decision.