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Consumer Price Index, Australia

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The Consumer Price Index (CPI) measures household inflation and includes statistics about price change for categories of household expenditure

Reference period
December 2020
Released
27/01/2021

Key statistics

  • The Consumer Price Index (CPI) rose 0.9% this quarter.
  • Over the twelve months to the December 2020 quarter the CPI rose 0.9%.
  • The most significant price rise was tobacco (+10.9%).
  • The most significant price fall was electricity (-7.5%).

What's new this quarter

This issue includes the introduction of updated weighting patterns. For more details see The 2020 annual re-weight of the CPI.

Two spotlight articles are included in this release:

  • CPI exclusion-based measures - this spotlight examines the CPI in the December 2020 quarter excluding selected influential movements.
  • Underlying inflation measures - this spotlight looks at underlying inflation in the December 2020 quarter using alternative measurement approaches.

An article was published on 14 January 2021 explaining the impact of COVID-19 on the December quarter CPI:

Main features

Weighted average of eight capital cities
 Sep Qtr 2020 to Dec Qtr 2020Dec Qtr 2019 to Dec Qtr 2020
% change% change
All groups CPI0.90.9
Food and non-alcoholic beverages0.22.3
Alcohol and tobacco4.29.3
Clothing and footwear-1.0-1.3
Housing-0.6-0.9
Furnishings, household equipment and services3.43.6
Health1.32.6
Transport0.9-4.6
Communication-0.4-2.7
Recreation and culture1.60.0
Education1.22.1
Insurance and financial services0.11.2
CPI analytical series
 All groups CPI, seasonally adjusted0.80.9
 Trimmed mean0.41.2
 Weighted median0.51.4

Main contributors to change

CPI groups


 

Food and non-alcoholic beverages group (+0.2%)

Alcohol and tobacco group (+4.2%)

Clothing and footwear group (-1.0%)

Housing group (-0.6%)

Furnishings, household equipment and services group (+3.4%)

Health group (+1.3%)

Transport group (+0.9%)

Communication group (-0.4%)

Recreation and culture group (+1.6%)

Education group (+1.2%)

Insurance and financial services group (+0.1%)

International trade exposure - tradable and non-tradables

Seasonally adjusted analytical series

Capital cities comparison

All groups CPI

All Groups CPI, All groups index numbers and percentage changes
 Index number(a)Percentage change
Dec Qtr 2020Sep Qtr 2020 to Dec Qtr 2020Dec Qtr 2019 to Dec Qtr 2020
Sydney118.01.00.8
Melbourne118.41.51.3
Brisbane117.51.11.0
Adelaide116.50.71.0
Perth113.0-1.0-0.1
Hobart117.60.80.8
Darwin111.50.60.0
Canberra116.30.81.1
Weighted average of eight capital cities117.20.90.9

a. Index reference period: 2011-12 = 100.0.


The Consumer Price Index (CPI) rose 0.9% in the December quarter in original terms and 0.8% in seasonally adjusted terms.

  • At the All groups level, seven capital cities saw rises ranging from 0.6% in Darwin to 1.5% in Melbourne for the quarter. Perth was the only exception, recording a fall of 1.0% due to the $600 household electricity credit introduced by the state government from 1 November.
  • Tobacco rose in all capital cities, due to the annual excise tax increase of 12.5% and the bi-annual excise tax increase based on Average Weekly Ordinary Time Earnings (AWOTE) indexation, both applied on 1 September 2020.
  • Furnishings, household equipment and services rose in all capital cities due to child care, following the cessation of free child care on 13 July. Out-of-pocket expenses have now returned to pre-COVID levels in all capital cities. Melbourne recorded a higher rise in the December 2020 quarter due to the increase in the out-of-pocket expenses for child care as attendance levels returned following stage 4 lockdown in the September quarter.
  • Health rose in all capital cities due to increases in private health insurance premiums on the 1 October 2020, following a six-month price freeze.
  • Annually, the CPI rose 0.9%. At the All groups level, six capital cities saw annual rises ranging from 0.8% in Sydney and Hobart, to 1.3% in Melbourne. Darwin was flat and Perth recorded a fall of 0.1%.

Capital city highlights:

Sydney (+1.0%)

Melbourne (+1.5%)

Brisbane (+1.1%)

Adelaide (+0.7%)

Perth (-1.0%)

Hobart (+0.8%)

Darwin (+0.6%)

Canberra (+0.8%)

Quarterly percentage change by capital city
IndexSydneyMelbourneBrisbaneAdelaidePerthHobartDarwinCanberraWeighted average of eight capital cities
All groups1.01.51.10.7-1.00.80.60.80.9
Food & non-alcoholic beverages0.00.40.4-0.20.70.00.4-0.30.2
Alcohol & tobacco4.43.64.15.04.85.43.63.44.2
Clothing & footwear-1.5-0.7-1.0-1.3-0.3-0.8-2.8-0.4-1.0
Housing0.20.10.8-0.1-7.70.3-0.50.2-0.6
Furnishings, household equipment and services2.28.12.10.70.70.31.52.33.4
Health1.41.31.92.6-0.11.40.80.51.3
Transport1.51.6-0.1-1.00.2-0.3-1.10.00.9
Communication-0.4-0.3-0.4-0.3-0.4-0.4-0.3-0.3-0.4
Recreation & culture2.31.41.60.91.4-0.82.02.61.6
Education1.61.60.40.20.10.00.20.41.2
Insurance & financial services0.4-0.30.50.60.01.5-0.50.90.1

Spotlight: CPI exclusion-based measures

Each quarter, the ABS produces a range of CPI exclusion-based measures, which remove selected components from the CPI basket. Typically, the removed components have volatile price changes and/or a pronounced seasonal pattern. These exclusion-based measures can help distinguish short term price fluctuations that impact the quarterly CPI movement, providing additional insights into the general direction of medium-term inflation.

An example of a CPI exclusion-based measure is ‘CPI excluding alcohol and tobacco’, where annual increases in the federal excise tax have had a significant effect on tobacco prices each year.

COVID-19 has brought about new challenges in measuring the CPI. For the December 2020 quarter, additional CPI exclusion-based measures have been produced to those previously available in Table 8 of this release. The additional exclusion-based measures, presented in Table 1 of this article, demonstrate some of the temporary impacts of COVID-19 on the December quarter CPI.

Table 1: CPI exclusion-based measures, December 2020 quarter
 Quarterly movementAnnual movement
%%
Headline CPI0.90.9
CPI excluding child care0.50.8
CPI excluding automotive fuel0.91.5
CPI excluding electricity1.21.1
CPI excluding imputed series(a)0.81.0

a. Excluding two series imputed off headline CPI in the September 2020 quarter: domestic holiday travel and accommodation and international holiday travel and accommodation.


Table 1 shows both the quarterly and annual movements for selected exclusion-based measures and can be used to compare to the headline CPI. For example, when excluding child care from the CPI, the quarterly movement is 0.5 per cent compared to 0.9 per cent for the published CPI. This highlights the impact that the unwinding of free child care has had on the December 2020 quarter CPI movement.

How to calculate exclusion-based series

Points contributions, available in Table 12 of the CPI release, can be used to calculate exclusion-based measures. The sum of the points contributions of all lower level components equals the overall CPI index value. The points contribution of selected components can then be excluded and the CPI re-calculated.

Measuring the quarterly price change that would occur when excluding a CPI component is calculated by subtracting the points contribution of the CPI component from the CPI index number in each quarter and then calculating the percentage change between the resulting indexes. ‘CPI excluding electricity’ series has been used as an example in Table 2.

Table 2: Calculating exclusion-based measure example
 Dec-20Sep-20
All Groups index117.2116.2
Electricity Points Contribution3.03.3
All Groups minus Electricity114.2112.9
Quarterly movement (114.2-112.9)/112.9*100 (%)1.2 

Table 2 shows that prices of all items other than electricity increased by 1.2 per cent on average between the September 2020 and December 2020 quarters.

Spotlight: Underlying inflation measures

The Trimmed Mean and Weighted Median provide important insights into underlying inflation and the health of the Australian economy. These measures are derived from the Consumer Price Index (CPI) by removing atypical movements from the quarterly CPI, and recalculating a quarterly movement. Full details of the methods can be found in Explaining the Trimmed Mean and Weighted Median.

The COVID-19 pandemic has resulted in some extremely large price changes, such as the provision and subsequent discontinuation of free childcare for Australian families. The underlying inflation measures reduce the influence of these large price movements, and thereby provide a measure of medium-term inflation.

As discussed in Update to measuring the CPI in the December 2020 quarter, prices for International holiday travel and accommodation were imputed during the December quarter to have a quarterly change equal to that of the headline CPI, rather than being measured. Following the 2020 annual re-weight this series contributes a weight of 0.1% to the CPI. Additionally, Domestic holiday travel and accommodation returned to normal price collection after being imputed in the September quarter, contributing a weight of 2 per cent to the CPI. 

Imputing price movements for these series presented the challenge of how they should contribute to the underlying inflation measures. The two options considered by the ABS were:

  1. Use all 87 CPI series, including the two imputed series, in the calculation of the Trimmed Mean and Weighted Median.
  2. Exclude the two imputed series and calculate the Trimmed Mean and Weighted Median using the remaining 85 series.

In order to maintain consistency in the methods used, the ABS selected option 1 for the official measures presented on the Main Features page of the December CPI release, as per the June and September quarters. In this article, Table 1 presents the quarterly and annual movements for both options 1 and 2.

Table 1. December 2020 quarter Trimmed Mean and Weighted Median, including and excluding imputed series
 Including imputed series (Option 1)Excluding imputed series (Option 2)
 Quarter (%)Annual (%)Quarter (%)Annual (%)
CPI0.90.90.81.0
Trimmed Mean0.41.20.41.4
Weighted Median0.51.40.41.4

Overall, excluding these two series from the Trimmed mean and Weighted median calculations (option 2) makes little difference to the quarterly and annual movements in the December quarter.

Chart 1 shows that when included in the calculations, both imputed series contribute to the Trimmed Mean, with Domestic holiday travel and accommodation also falling as the Weighted Median. Chart 2 shows the calculation of the two measures when the two imputed series are excluded.

Chart 1. December quarter Trimmed mean and Weighted median including imputed series (option 1)

Graph showing option one December quarter Trimmed mean and Weighted median including imputed series
Chart 1. December quarter Trimmed mean and Weighted median including imputed series (option 1) Graph showing the calculation of the Trimmed mean and Weighted median including imputed series (option 1). Influential series such as Child care and Electricity are trimmed from the trimmed mean.

Data for: December quarter Trimmed mean and Weighted median including imputed series (option 1)

Chart 2. September quarter Trimmed mean and Weighted median excluding imputed series (option 2)

Graph showing option two December quarter Trimmed mean and Weighted median excluding imputed series
Chart 2. December quarter Trimmed mean and Weighted median excluding imputed series (option 2) Graph showing calculation of the Trimmed mean and Weighted median excluding imputed series (option 2). Influential series such as Child care and Electricity are trimmed from the trimmed mean.

Data for: December quarter Trimmed mean and Weighted median excluding imputed series (option 2)

Article archive

CPI feature articles

Selected tables - capital cities

1 All groups CPI, index numbers(a)

2 All groups CPI, percentage changes

3 Longer term series: all groups CPI, weighted average of eight capital cities, index numbers

History of changes

26 February 2021

The spotlight article 'CPI exclusion based measures' contains a formula in Table 2. The formula is to assist users in how to calculate a percentage change. The formula contained an error which has been corrected. There were no errors in any data contained in Table 2.

Data Downloads

Time Series Spreadsheets

Data files

Use of price indexes in contracts

Price indexes published by the Australian Bureau of Statistics (ABS) provide summary measures of the movements in various categories of prices over time. They are published primarily for use in Government economic analysis. Price indexes are also often used in contracts by businesses and government to adjust payments and/or charges to take account of changes in categories of prices (Indexation Clauses).

Use of Price Indexes in Contracts that sets out a range of issues that should be taken into account by parties considering including an Indexation Clause in a contract using an ABS published price index.

Frequently asked questions

The Frequently Asked Questions page that has answers to a number of common questions to do with price indexes and the Consumer Price Index, in particular.

Previous catalogue number

This release previously used catalogue number 6401.0.

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