ABS response to "So, who needs necessities, anyway" (The Age 18 September 2006)

Your recent article "So, who needs necessities, anyway" (18/09/06) suggested that the Australian Bureau of Statistics (ABS) should produce supplementary cost of living indexes for low income earner groups. The fact is that the ABS already publishes such indexes.

The ABS has long supplemented the CPI with four additional price indexes designed to measure the impact of changes in prices on the out-of-pocket living costs experienced by four categories of Australian households. These are: Employee households, Age pensioner households, Other government transfer recipient households, and Self-funded retiree households. Each index is based on the spending patterns for that particular group and the price movements that are recorded are those that each household groups experiences. These indexes include mortgage interest charges in order to reflect the impact of changing house prices and interest rates on the disposable incomes of households.

The articles also assert that price movements for staples or essentials are increasing more rapidly than non-essential items. This is correct for some items. However, all four supplementary indexes published by the ABS have shown little difference from the movements produced in the overall CPI. The latest release of these indexes was for June Quarter 2005. For example, the index numbers at that period for both Age pensioner and Other government transfer recipient households were 123.0 compared to the overall CPI of 122.6 (reference period 1998=100.0).

Separate analysis by the ABS has also shown that price movements for rural areas move similarly to the capital cities over the longer run.

Had your writer checked the facts with the ABS before going to print, your readers could have been better informed on this important topic. The publications of "Analytical Living Cost Indexes for Selected Australian Households" can be found on the ABS website (www.abs.gov.au).

Peter Harper
Deputy Australian Statistician
Australian Bureau of Statistics

More information on Analytical Living Cost Indexes for Selected Australian Household Types available from this link.