Introducing a monthly CPI indicator

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16/08/2022

The Australian Bureau of Statistics (ABS) today has released an information paper on the introduction of a new monthly CPI indicator as a timelier measure of household inflation.

Australian Statistician Dr David Gruen AO said: “While the quarterly CPI will continue to be Australia’s key measure of inflation, the monthly CPI indicator will complement this to provide more timely insights into household inflation.” 

“A monthly CPI indicator will bring Australia into line with the frequency of inflation data for comparable countries including the United States, United Kingdom, Canada, Japan and European Union countries.”  

The information paper explains the methodology underpinning the monthly CPI indicator, research findings and presents monthly data from 2018 to June 2022.

Dr Gruen said: “An important feature of the monthly CPI indicator is that, while it will represent all goods and services in the CPI basket, only around two-thirds of items in the CPI basket will have up-to-date prices each month. Items where prices typically change more frequently and will have up-to-date prices each month include food, alcohol, tobacco, clothing, rents, petrol and holiday travel.”

“That said, the monthly CPI indicator data included in the information paper show that the indicator aligns closely to the quarterly CPI and provides a timelier indicator of inflation.” (See chart below.)

“The annual rise in the monthly CPI indicator increased from 5.5 per cent in April to 6.2 per cent in May and 6.8 per cent in June. As was the case for the annual CPI inflation rate of 6.1 per cent in the June quarter, the monthly CPI indicator movements were driven by price increases for petrol, new dwelling construction and food,” said Dr Gruen.

The ABS will commence publication of the official monthly CPI indicator series on Wednesday, 26 October 2022 alongside, and in addition to, the quarterly CPI produced by the ABS.

Dr Gruen said: “The focus of the ABS has been on making the monthly CPI indicator available in a manner that is fit for purpose and useful for decision making. Over time and where possible, the ABS intends to expand the coverage of what is measured on a monthly basis, starting with the addition of monthly rents data in the official commencement of the publication in October.”  

Comments from the public on the information paper are welcome and can be sent to prices.statistics@abs.gov.au through until 13 September 2022.

Figure 2: Annual change in monthly CPI indicator and quarterly CPI series (%)

Annual change in monthly CPI indicator and quarterly CPI series
The chart in figure 2 compares the annual percentage changes in the monthly CPI indicator and quarterly CPI series. The chart demonstrates that the monthly CPI indicator aligns closely to the quarterly CPI and provides a timelier indication of inflation.
What's in the monthly CPI indicator
This infographic explains the frequency with which data is collected by the proportion of the quarterly CPI basket that these represent. Conceptually, the monthly CPI indicator will include all the items of the quarterly CPI basket, however, not all items in the basket will be updated with new prices each month. Where prices are not collected in a particular month, prices collected in previous months will be ‘carried forward’ (see appendix 2 for further explanation). Where prices are updated in month 2 or 3 of any given quarter, the new prices data will not be used to revise previous months in the quarter. For this reason, the average of the index in the three months for the monthly CPI indicator will not equal the index of the quarterly CPI. Including the data collected once per year: • Month 1 (January, April, July and October months) will include up-to-date price information for 62 per cent of the weight of the quarterly CPI. • Month 2 (February, May, August and November months) will include up-to-date price information for 73 per cent of the weight of the quarterly CPI. • Month 3 (March, June, September and December months) will include up-to-date price information for 71 per cent of the weight of the quarterly CPI. All eleven groups are included in each month, with the following breakdown: Month 1: 43% monthly data, 9% quarterly data, 10% annual data, 38% data not updated (carried forward) Month 2: 43% monthly data, 20% quarterly data, 10% annual data, 27% data not updated (carried forward) Month 3: 43% monthly data, 18% quarterly data, 10% annual data, 29% data not updated (carried forward)

Media notes

  • In addition to the release of the Information Paper ‘Introducing a monthly CPI indicator for Australia’, a series of Frequently Asked Questions has also been published.

  • When reporting ABS data you must attribute the Australian Bureau of Statistics (or the ABS) as the source.
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