OUTCOMES
1.1 The principal purpose of the CPI is household inflation measurement and the acquisitions approach will remain the conceptual basis for compiling the CPI. Consistent with maintaining this conceptual basis, owner-occupied housing (OOH) will continue to be measured as the change in the price of gross fixed capital formation (GFCF) of houses, net of land. A weighting pattern representative of all private households in the eight capital cities will continue to be used.
1.2 The current quarterly publication of the outlays based Analytical Living Cost Indexes (ALCIs) and the Pensioner and Beneficiary Living Cost Index (PBLCI) will be maintained, and the current research to determine the need for improved coverage of outlets and products in the PBLCI will be completed. Where there is a clearly demonstrated need, and additional resources are provided, other complementary quarterly price indexes on an outlays basis will be produced for particular population subgroups on a case-by-case basis.
1.3 There was significant demand for a monthly CPI. The ABS is persuaded there would be a significant benefit from more timely and responsive economic management if a CPI of equivalent quality to the current quarterly index were available monthly. Additional funding will be required to meet the costs involved in compiling a monthly index.
1.4 The ABS will change its measurement of financial services in the CPI to ensure that this component of the CPI is of high quality. The changes are as follows:
a) the indirectly measured component of the Deposit and loan facilities index (i.e. financial intermediation services indirectly measured (FISIM)) will be removed from the headline CPI from the commencement of the 16th series in September quarter 2011;
b) the Deposit and loan facilities index will comprise direct fees and charges only and will be renamed 'Deposit and loan facilities - direct fees' from the commencement of the 16th series in September quarter 2011;
c) a new analytical series, comprising the All groups CPI inclusive of FISIM, will be published on a quarterly basis from the commencement of the 16th series in September quarter 2011;
d) the methodology for measuring the price of FISIM will be refined for the analytical series, informed by international developments in this area. An information paper covering the developments in the measurement of FISIM and other financial services will also be released;
e) the ABS will continue to work with data providers (financial institutions) to obtain the high quality, detailed data necessary to measure FISIM robustly; and
f) a Deposit and loan facilities index comprising direct fees and FISIM will be re-introduced into the headline CPI when the ABS is satisfied that the methodology and data are sufficiently robust to produce high quality estimates. The ABS plans to reintroduce FISIM measurement within the CPI in time for the 17th series CPI.
1.5 The ABS will investigate methodologies for other significant financial services that are currently not covered in the CPI (e.g. superannuation charges) and introduce them into the CPI when the ABS is satisfied that the methodology and data are sufficiently robust to produce high quality estimates.
1.6 Subject to availability of the additional funding required, the frequency of CPI weight updates will be increased from six-yearly to four-yearly, via a more frequent Household Expenditure Survey (HES).
1.7 To ensure a robust measure of the CPI, strategies to minimise possible sources of bias in the CPI will be continued (e.g. the use of scanner data will be explored).
1.8 The ABS will provide more information on the quality adjustment processes used in the CPI to better inform the public on circumstances where quality adjustments take place.
1.9 The ABS sees potential with the use of scanner data in the CPI, both to improve reliability and reduce data collection costs, and will continue to explore the use of scanner data for CPI and related purposes, leveraging international experience with the use of such data.
1.10 The CPI and all related series will be presented on a reference base of 2009-10 = 100.0, commencing with the September quarter 2012 CPI.
1.11 The Australian CPI will continue to use the ABS Consumer Price Index Commodity Classification (CPICC). The ABS will take action internationally to influence a revision of the Classification of Individual Consumption According to Purpose (COICOP) to address shortcomings which prevent its use as the primary product classification in the CPI.
1.12 A correspondence between CPICC and the Input-Output Product Classification (IOPC) will be compiled and published for the 16th series CPI.
1.13 The ABS will continue to produce analytical measures of underlying inflation. The current seasonal adjustment methods will be replaced by standard ABS seasonal adjustment methods. The ABS will produce seasonally adjusted estimates of the CPI, and of significant seasonal components (using standard ABS seasonal adjustment methodologies), from the commencement of the 16th series in September quarter 2011. The production of seasonally adjusted individual capital city indexes will be subject to appropriate funding. The unadjusted CPI will continue to be the official headline measure.
1.14 The ABS will publish an All groups excluding food and energy index as part of the analytical series, from the September quarter 2011.
1.15 The ABS will update the tradable and non-tradable series classifications, from the September quarter 2011.
1.16 The ABS will discontinue the Average Retail Prices (ARP) publication from the September quarter 2011; the June quarter 2011 release will be the final issue.
1.17 The ABS will engage in discussions with potential users of low level CPI data to discuss how their needs might best be met on a case-by-case basis. The ABS will not develop a confidentialised unit record file (CURF) of collected prices.
1.18 The ABS will explore cost effective options to expand CPI coverage beyond capital cities. However, this must be considered in the context of competing priorities within the ABS work program.
1.19 The ABS will undertake the development and publication of annual spatial price indexes (SPIs) for capital cities, subject to appropriate funding and consideration of competing priorities within the ABS work program.
1.20 The ABS will investigate annual SPIs with an expanded scope to include rest of state components, subject to appropriate funding and consideration of competing priorities within the ABS work program.
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