CONSUMER PRICE INDEX (CPI)
The CPI has been designed as a general measure of price inflation faced by households. While several conceptual bases are possible, the ABS has adopted the concept of the CPI as a measure of changes, over time, in the prices of a basket of goods and services acquired by households in the eight capital cities in Australia.
The simplest way of thinking about the CPI is to imagine a basket of goods and services of the kind typically acquired by Australian households. As prices vary, the total cost of this basket will also vary. The CPI is a measure of the changes in the cost of this basket as the prices of items in it change.
From the September quarter 2005 onwards, the total basket is divided into the following 11 major commodity groups: Food; Alcohol and tobacco; Clothing and footwear; Housing; Household contents and services; Health; Transportation; Communication; Recreation; Education; and Financial and insurance services. These groups are, in turn, divided into 33 subgroups and the subgroups into 90 expenditure classes.
In addition to the aggregate 'All groups' index, indexes are compiled and published for each of the groups, subgroups and expenditure classes for each state and territory capital city. National indexes are constructed as the weighted average of the indexes compiled for each of the eight capital cities.
The 15th series CPI is the latest of a number of retail/consumer price indexes that have been constructed for various purposes by the ABS. (More information about the CPI can be found in Consumer Price Index: Concepts, Sources and Methods (6461.0).)
Work has commenced on the latest review of the CPI. The 16th series CPI review will be the first major review undertaken since 1997. It will involve updating item weights, and examining the scope and coverage of the index and other methodological issues. The resulting 16th series CPI will be published in the September quarter 2011 CPI release.
Price movements by city
Table 29.1 presents All groups CPI numbers for each of the eight capital cities and the weighted average of the eight capital cities, together with percentage changes.
The capital city indexes measure price movements over time in each city individually. They cannot be used to compare price levels between capital cities. For example, the index for Sydney in 2008-09 of 165.8, compared with the corresponding index for Darwin of 163.6, does not mean that prices in Sydney are higher than those in Darwin. It means that, since the reference base period (1989-90), prices in Sydney have increased by a greater percentage than those in Darwin (65.8% compared with 63.6%).
29.1 CONSUMER PRICE INDEX, All groups, Capital cities(a) |
|
 | Sydney | Melbourne | Brisbane | Adelaide | Perth | Hobart | Darwin | Canberra | Australia |
INDEX NUMBER(b) |
|
| 2004-05 | 147.7 | 145.7 | 148.5 | 150.4 | 144.0 | 147.1 | 141.8 | 146.7 | 147.0 |
| 2005-06 | 152.1 | 150.2 | 153.2 | 155.2 | 150.1 | 151.8 | 146.5 | 151.9 | 151.7 |
| 2006-07 | 156.2 | 154.2 | 158.3 | 159.2 | 156.1 | 155.7 | 152.9 | 156.4 | 156.1 |
| 2007-08 | 160.9 | 159.6 | 164.8 | 164.4 | 161.7 | 160.3 | 158.3 | 162.0 | 161.4 |
| 2008-09 | 165.8 | 164.1 | 171.0 | 169.7 | 166.6 | 164.9 | 163.6 | 167.5 | 166.4 |
CHANGE FROM PREVIOUS FINANCIAL YEAR (%) |
|
| 2004-05 | 2.5 | 2.0 | 2.6 | 2.3 | 3.2 | 3.2 | 2.2 | 2.3 | 2.4 |
| 2005-06 | 3.0 | 3.1 | 3.2 | 3.2 | 4.2 | 3.2 | 3.3 | 3.5 | 3.2 |
| 2006-07 | 2.7 | 2.7 | 3.3 | 2.6 | 4.0 | 2.6 | 4.4 | 3.0 | 2.9 |
| 2007-08 | 3.0 | 3.5 | 4.1 | 3.3 | 3.6 | 3.0 | 3.5 | 3.6 | 3.4 |
| 2008-09 | 3.0 | 2.8 | 3.8 | 3.2 | 3.0 | 2.9 | 3.3 | 3.4 | 3.1 |
|
| (a) All group index numbers. Reference base year is 1989-90 = 100.0. |
| (b) Arithmetic average of quarterly index numbers for financial year. |
| Source: ABS Consumer Price Index, Australia (6401.0). |
Price movements by broad commodity group
Table 29.2 presents, the weighted average of the eight capital cities, the index numbers and percentage changes for each of the 11 major commodity groups of the 15th Series CPI and for All Groups.
29.2 CONSUMER PRICE INDEX GROUPS, Weighted average of eight capital cities(a) |
|
| Food | Alcohol and tobacco | Clothing and footwear | Housing | Household contents and services | Health | Transpor-
tation | Commu-
nication | Recre-
ation | Edu-
cation | Financial and insurance services(b) | All groups |
INDEX NUMBER |
|
| 2004-05 | 154.8 | 225.4 | 110.8 | 124.8 | 120.7 | 204.3 | 146.8 | 111.1 | 130.7 | 238.7 | . . | 147.0 |
| 2005-06 | 162.3 | 233.1 | 109.2 | 129.3 | 122.2 | 213.5 | 155.5 | 109.5 | 132.0 | 253.2 | 101.2 | 151.7 |
| 2006-07 | 172.4 | 240.6 | 108.4 | 133.7 | 124.6 | 223.5 | 158.0 | 110.8 | 133.8 | 264.6 | 103.0 | 156.1 |
| 2007-08 | 177.8 | 249.8 | 109.3 | 140.6 | 123.4 | 233.5 | 165.2 | 111.2 | 135.7 | 275.6 | 109.4 | 161.4 |
| 2008-09 | 186.5 | 263.6 | 110.2 | 149.0 | 125.1 | 245.4 | 163.7 | 112.0 | 137.1 | 289.1 | 111.6 | 166.4 |
CHANGE FROM PREVIOUS FINANCIAL YEAR (%) |
|
| 2004-05 | 1.6 | 3.5 | -1.7 | 3.8 | -0.3 | 5.4 | 3.4 | 1.0 | 0.5 | 6.9 | . . | 2.4 |
| 2005-06 | 4.8 | 3.4 | -1.4 | 3.6 | 1.2 | 4.5 | 5.9 | -1.4 | 1.0 | 6.1 | . . | 3.2 |
| 2006-07 | 6.2 | 3.2 | -0.7 | 3.4 | 2.0 | 4.7 | 1.6 | 1.2 | 1.4 | 4.5 | 1.8 | 2.9 |
| 2007-08 | 3.1 | 3.8 | 0.8 | 5.2 | -1.0 | 4.5 | 4.6 | 0.4 | 1.4 | 4.2 | 6.2 | 3.4 |
| 2008-09 | 4.9 | 5.5 | 0.8 | 6.0 | 1.4 | 5.1 | -0.9 | 0.7 | 1.0 | 4.9 | 2.0 | 3.1 |
|
| . . not applicable |
| (a) All group index numbers. Reference base year is 1989-90 = 100.0. |
| (b) Base: June quarter 2005 = 100.0. |
| Source: ABS Consumer Price Index, Australia (6401.0). |
Price movements for selected household types
Graph 29.3 and table 29.4 present analytical living cost indexes (ALCIs) specifically designed to measure changes in living costs for four selected household types: Employee households; Age pensioner households; Other government transfer recipient households; and Self-funded retiree households.
29.3 Analytical Living Cost Indexes for selected Household^Types(a) - June 1999 to June 2009
29.4 Analytical Living Cost Indexes For Selected Household Types(a) |
|
| Employee | Age pensioner | Other government transfer recipient | Self-funded retiree | CPI(b)(c) |
INDEX NUMBER(d) |
|
| 2004-05 | 121.7 | 121.8 | 121.6 | 120.3 | 121.5 |
| 2005-06 | 126.1 | 126.3 | 126.1 | 124.4 | 125.3 |
| 2006-07 | 131.0 | 131.1 | 130.9 | 128.4 | 129.0 |
| 2007-08 | 136.7 | 135.3 | 136.0 | 132.5 | 133.4 |
| 2008-09 | 140.8 | 140.4 | 141.1 | 136.8 | 137.6 |
CHANGE FROM PREVIOUS FINANCIAL YEAR (%) |
|
| 2004-05 | 3.0 | 2.4 | 2.5 | 2.2 | 2.4 |
| 2005-06 | 3.6 | 3.7 | 3.7 | 3.4 | 3.1 |
| 2006-07 | 3.9 | 3.8 | 3.8 | 3.2 | 3.0 |
| 2007-08 | 4.4 | 3.2 | 3.9 | 3.2 | 3.4 |
| 2008-09 | 3.0 | 3.8 | 3.7 | 3.2 | 3.1 |
|
| (a) Reference base is June quarter 1998 = 100.0. |
| (b) The CPI has been re-referenced from 1989-90 = 100.0 to June quarter 1998 = 100.0 for ease of comparison with the living cost indexes for household types. |
| (c) The CPI is designed to measure price inflation for the household sector and not changes in living costs. |
| (d) Annual average of quarterly index numbers. |
| Source: ABS Analytical Living Cost Index (6463.0). |
These indexes represent the conceptually preferred measures for assessing the impact of changes in prices on the disposable incomes of households. These indexes are particularly suited for assessing whether or not the disposable incomes of households have kept pace with price changes. The CPI, on the other hand, is designed to measure price inflation as faced by all households and is not the conceptually ideal measure for assessing the impact of price changes on the disposable incomes of households. The most notable differences are that living cost indexes include interest charges but do not include house purchases, while inflation indexes do not include interest charges but do include house purchases.
For more information about these indexes see the article
Price impacts on the living costs of selected household types in Year Book Australia 2005.
Table 29.4 shows that, between 2007-08 and 2008-09 changes in living costs ranged from a low of 3.0% for Employee households to a high of 3.8% for Age pensioner households. The CPI rose by 3.1% over the same period. Over the period from 1998-99 to 2008-09, changes in living costs for all four household types were similar to the change in the CPI. Changes in living costs ranged from 36.8% for Self-funded retiree households to 41.1% for Other government transfer recipient households. The CPI rose by 37.6%.
The September 2009 quarter saw the first quarterly publication of the ALCIs. Previously they were published annually in the June quarter.
The Pensioner Beneficiary Living Cost Index was published for the first time for the June 2007 quarter. For more information about this index see the article
Pensioner and Beneficiary Living Cost Index later in this chapter.
Long-term price series
Although the CPI has only been compiled from 1948, an approximate long-term measure of inflation faced by households has been constructed by linking together earlier selected retail price index series (table 29.5). The index numbers are expressed on the reference base year 1945 = 100.0.
29.5 Retails/Consumer Price Index Numbers(a)(b) |
|
| Year | Index no. | Year | Index no. | Year | Index no. | Year | Index no. |
|
| 1901 | 47 | 1931 | 78 | 1961 | 252 | 1991 | 1 898 |
| 1902 | 50 | 1932 | 74 | 1962 | 251 | 1992 | 1 917 |
| 1903 | 49 | 1933 | 71 | 1963 | 252 | 1993 | 1 952 |
| 1904 | 46 | 1934 | 73 | 1964 | 258 | 1994 | 1 989 |
| 1905 | 48 | 1935 | 74 | 1965 | 268 | 1995 | 2 082 |
| 1906 | 48 | 1936 | 75 | 1966 | 276 | 1996 | 2 136 |
| 1907 | 48 | 1937 | 78 | 1967 | 286 | 1997 | 2 141 |
| 1908 | 51 | 1938 | 80 | 1968 | 293 | 1998 | 2 159 |
| 1909 | 51 | 1939 | 82 | 1969 | 302 | 1999 | 2 191 |
| 1910 | 52 | 1940 | 85 | 1970 | 313 | 2000 | 2 289 |
| 1911 | 53 | 1941 | 89 | 1971 | 332 | 2001 | 2 389 |
| 1912 | 59 | 1942 | 97 | 1972 | 352 | 2002 | 2 462 |
| 1913 | 59 | 1943 | 101 | 1973 | 385 | 2003 | 2 530 |
| 1914 | 61 | 1944 | 100 | 1974 | 443 | 2004 | 2 588 |
| 1915 | 70 | 1945 | 100 | 1975 | 510 | 2005 | 2 658 |
| 1916 | 71 | 1946 | 102 | 1976 | 579 | 2006 | 2 753 |
| 1917 | 75 | 1947 | 106 | 1977 | 650 | 2007 | 2 817 |
| 1918 | 80 | 1948 | 117 | 1978 | 702 | 2008 | 2 940 |
| 1919 | 91 | 1949 | 128 | 1979 | 766 | | |
| 1920 | 103 | 1950 | 140 | 1980 | 844 | | |
| 1921 | 90 | 1951 | 167 | 1981 | 926 | | |
| 1922 | 87 | 1952 | 196 | 1982 | 1 028 | | |
| 1923 | 89 | 1953 | 205 | 1983 | 1 132 | | |
| 1924 | 88 | 1954 | 206 | 1984 | 1 177 | | |
| 1925 | 88 | 1955 | 211 | 1985 | 1 257 | | |
| 1926 | 90 | 1956 | 224 | 1986 | 1 370 | | |
| 1927 | 89 | 1957 | 229 | 1987 | 1 487 | | |
| 1928 | 89 | 1958 | 233 | 1988 | 1 594 | | |
| 1929 | 91 | 1959 | 237 | 1989 | 1 714 | | |
| 1930 | 87 | 1960 | 245 | 1990 | 1 839 | | |
|
| (a) Reference base year is 1945 = 100.0. |
| (b) The index numbers from 1901 to 1980 relate to the weighted average of six state capital cities; and from 1981 to the weighted average of eight capital cities. Index numbers are for calendar years. |
| Source: ABS data available on request, Consumer Price Index. |
29.6 Retail/Consumer Price Index, Annual Changes
29.7 Consumer Price Index, International comparisons(a)(b) |
|
| 2004-05 | 2005-06 | 2006-07 | 2007-08 | 2008-09 |
INDEX NUMBER |
|
| Australia | 150.3 | 155.2 | 159.8 | 163.8 | 167.8 |
| Canada | 139.3 | 142.2 | 143.8 | 145.8 | 147.6 |
| Germany | 131.1 | 133.1 | 135.0 | 138.7 | 140.1 |
| Hong Kong (SAR China) | 161.2 | 162.6 | 164.7 | 171.2 | 173.1 |
| Indonesia | 560.2 | 646.6 | 700.5 | 763.5 | 831.7 |
| Japan | 106.2 | 106.1 | 106.4 | 107.3 | 107.8 |
| Korea, Republic of (South) | 204.9 | 210.4 | 215.4 | 223.2 | 233.0 |
| New Zealand | 132.9 | 136.8 | 139.6 | 143.2 | 147.7 |
| Singapore | 125.6 | 126.9 | 127.8 | 134.2 | 137.0 |
| Taiwan | 134.7 | 138.2 | 138.4 | 144.4 | 146.6 |
| United Kingdom | 149.7 | 152.8 | 157.6 | 162.4 | 168.6 |
| United States of America | 146.2 | 152.6 | 155.6 | 161.8 | 163.7 |
CHANGE FROM PREVIOUS FINANCIAL YEAR (%) |
|
| Australia | 2.0 | 3.3 | 3.0 | 2.5 | 2.4 |
| Canada | 1.8 | 2.1 | 1.1 | 1.4 | 1.2 |
| Germany | 1.7 | 1.5 | 1.4 | 2.7 | 1.0 |
| Hong Kong (SAR China) | 1.7 | 0.9 | 1.3 | 3.9 | 1.1 |
| Indonesia | 6.8 | 15.4 | 8.3 | 9.0 | 8.9 |
| Japan | 0.1 | -0.1 | 0.3 | 0.8 | 0.5 |
| Korea, Republic of (South) | 3.8 | 2.7 | 2.4 | 3.6 | 4.4 |
| New Zealand | 1.8 | 2.9 | 2.0 | 2.6 | 3.1 |
| Singapore | 1.1 | 1.0 | 0.7 | 5.0 | 2.1 |
| Taiwan | 2.7 | 2.6 | 0.1 | 4.3 | 1.5 |
| United Kingdom | 1.2 | 2.1 | 3.1 | 3.0 | 3.8 |
| United States of America | 3.1 | 4.4 | 2.0 | 4.0 | 1.2 |
|
| (a) Reference base year is 1989-90 = 100.0. |
| (b) All groups excluding Housing and Financial and insurance services. |
| Source: ABS Consumer Price Index, Australia (6401.0). |
For more information about these former retail price index series see the article
History of retail/consumer price indexes in Australia in Year Book Australia 2005.
Graph 29.6 shows the annual percentage changes derived from this retail/consumer price index series for the period 1908-2008.
International comparisons
In analysing price movements in Australia, an important consideration is Australia's performance relative to other countries. In recognition of the many differences in the structure of the housing sector in different countries and in the way housing is treated in their CPIs, the Seventeenth International Conference of Labour Statisticians (2003) adopted a resolution which called for countries, where possible, to compile and provide for dissemination to the international community an index that excludes housing and financial services.
Table 29.7 presents indexes for selected countries on a basis consistent with the resolution and broadly comparable to the Australian series 'All groups excluding Housing and Financial and insurance services'.
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