Consumer Price Index, Australia

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

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Reference period
September 2020
Released
28/10/2020
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Key statistics

  • The Consumer Price Index (CPI) rose 1.6% this quarter.
  • Over the twelve months to the September 2020 quarter the CPI rose 0.7%.
  • Child care was the most significant rise (contributing 0.9 percentage points to the headline CPI quarterly movement), following the end of free child care on 13 July.

Main features

 Jun Qtr 2020 to Sep Qtr 2020Sep Qtr 2019 to Sep Qtr 2020
Weighted average of eight capital cities% change% change
All groups CPI1.60.7
Food and non-alcoholic beverages-0.43.4
Alcohol and tobacco1.68.1
Clothing and footwear0.4-0.5
Housing0.0-0.2
Furnishings, household equipment and services12.0-0.1
Health-0.11.0
Transport3.4-4.0
Communication-0.8-3.3
Recreation and culture1.1-0.7
Education2.11.0
Insurance and financial services0.11.6
CPI analytical series  
 All groups CPI, seasonally adjusted1.50.7
 Trimmed mean0.41.2
 Weighted median0.31.3

What's new this quarter

Two spotlight articles are included in this release:

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

An article was published on 11 October 2020 explaining the impact of COVID-19 on the September quarter CPI:

Main contributors to change

CPI groups


 

Food and non-alcoholic beverages group (-0.4%)

Alcohol and tobacco group (+1.6%)

Clothing and footwear group (+0.4%)

Housing group (0.0%)

Furnishings, Household equipment and services group (+12.0%)

Health group (-0.1%)

Transport group (+3.4%)

Communication group (-0.8%)

Recreation and culture group (+1.1%)

Education group (+2.1%)

Insurance and financial services group (+0.1%)

International trade exposure - tradable and non-tradables

Seasonally adjusted analytical series

Capital cities comparison

All groups CPI

The Consumer Price Index (CPI) rose 1.6% in the September quarter in original terms and 1.5% in seasonally adjusted terms. Annually, the CPI rose 0.7%.

  • At the All groups level, all capital cities saw increases ranging from 0.9% in Melbourne to 2.3% in Brisbane and Canberra.
  • Furnishings, household equipment and services rose in all capital cities due to child care, following the end of free child care on 13 July. Differences in the capital city movements at the All groups level can largely be explained by differences in the weight of child care in each city. 
Weight and percentage change of Child care to the CPI for each capital city
CityChild care weight to All groups CPI (%) (a)March to September quarter movement (%)
Sydney1.52-13.6
Melbourne0.95-67.6
Brisbane1.31-14.3
Adelaide0.70-12.1
Perth0.82-12.1
Hobart0.70-12.2
Darwin1.24-12.1
Canberra1.68-12.1
Weighted average of 8 capital cities1.17-26.3

a. Source: ABS 2019 (cat. no. 6470.0.55.002)
 

  • Transport rose in all capital cities due to price rises in automotive fuel as global demand saw a partial return, and global production fell. Automotive fuel increases ranged from (+0.1%) in Darwin to (+11.1%) in Melbourne. Hobart was the only city to record a fall (-1.5%).
  • Education rose in most capital cities due to preschool and primary education following the discontinuation of free childcare, affecting before and after school care. Preschool and primary education increases ranged from (+0.2%) in Hobart to (+19.2%) in Sydney.
  • Annually, at the All groups level, seven capital cities saw rises ranging from (+0.3%) in Sydney to (+1.7%) in Hobart. The only offsetting city was Darwin (-0.4%).
All Groups CPI, All groups index numbers and percentage changes
 Index number(a)Percentage change
 Sep Qtr 2020Jun Qtr 2020 to Sep Qtr 2020Sep Qtr 2019 to Sep Qtr 2020
Sydney116.81.80.3
Melbourne116.70.90.7
Brisbane116.22.30.6
Adelaide115.71.01.0
Perth114.11.81.3
Hobart116.71.01.7
Darwin110.81.7-0.4
Canberra115.42.31.0
Weighted average of eight capital cities116.21.60.7

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

Capital city highlights:

Sydney (+1.8%)

Melbourne (+0.9%)

Brisbane (+2.3%)

Adelaide (+1.0%)

Perth (+1.8%)

Hobart (+1.0%)

Darwin (+1.7%)

Canberra (+2.3%)

Quarterly percentage change by capital city
IndexSydneyMelbourneBrisbaneAdelaidePerthHobartDarwinCanberraWeighted average of eight capital cities
All groups1.80.92.31.01.81.01.72.31.6
Food & non-alcoholic beverages-0.2-0.8-0.4-0.3-0.4-0.2-0.1-0.1-0.4
Alcohol & tobacco1.22.11.51.91.61.61.51.31.6
Clothing & footwear0.80.40.1-0.41.10.23.00.60.4
Housing-0.60.30.7-1.81.6-0.2-0.30.20.0
Furnishings, household equipment and services18.15.114.88.79.38.214.621.812.0
Health-0.1-0.4-0.10.1-0.30.3-0.30.6-0.1
Transport2.13.25.84.33.80.61.33.03.4
Communication-0.8-0.8-0.8-0.8-0.8-0.6-0.8-0.8-0.8
Recreation & culture1.20.81.21.11.31.10.82.01.1
Education4.10.63.11.70.20.01.62.62.1
Insurance & financial services0.3-0.40.1-0.60.50.30.7-0.50.1

Spotlight: CPI exclusion-based measures

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 has a significant effect on tobacco prices each year. 

COVID-19 has brought about new challenges in measuring the CPI. For the September 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, help remove some of the temporary impacts of COVID-19 on the September quarter CPI.

Table 1: CPI exclusion-based measures, September 2020 quarter
 Quarterly movement (%)Annual movement (%)
Headline CPI1.60.7
CPI excluding child care0.70.9
CPI excluding automotive fuel1.41.2
CPI excluding child care, automotive fuel and preschool and primary education0.41.6
CPI excluding imputed series(1)1.50.9
CPI excluding Melbourne1.80.6

1. Excluding five series imputed off headline CPI in the June 2020 quarter: urban transport fares, domestic holiday travel and accommodation, international holiday travel and accommodation, sports participation; and other recreational, sporting and cultural services.
 

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 0.7 per cent compared to 1.6 per cent for the CPI. This highlights the impact that the removal of free child care has had on the September 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 index. ‘CPI excluding automotive fuel’ series has been used as an example in table 2.

Table 2: Calculating exclusion-based measure example
 Sep-20Jun-20
All Groups index116.2114.4
Automotive fuel Points Contribution3.573.26
All Groups minus Automotive fuel112.6111.1
Quarterly movement (112.6-111.1)/111.1*100 (%)1.4% 


Table 2 shows that prices of all items other than automotive fuel increased by 1.4 per cent on average between the June 2020 quarter and September 2020 quarter. 

The September 2020 quarter saw COVID-19 have a significant impact on a range of CPI components. This article has demonstrated how excluding these components from the headline CPI provides new insights into the level of inflation in the Australian economy.

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 significant fall in automotive fuel prices which partially recovered this quarter, and 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 Measuring the Consumer Price Index: September quarter update, prices for two series were imputed during the September quarter to have a quarterly change equal to that of the headline CPI, rather than being measured. The two series were: Domestic holiday travel and accommodation and International holiday travel and accommodation. These two series contribute a weight of 6 per cent to the CPI. Additionally, three series returned to normal price collection after being imputed in the June quarter. These three series were Urban transport; Sports participation; and Other recreational, sporting and cultural services, and contribute a weight of 3 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 five imputed series, in the calculation of the Trimmed Mean and Weighted Median.
  2. Exclude the five imputed series and calculate the Trimmed Mean and Weighted Median using the remaining 82 CPI 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 September quarter CPI release, as per the June quarter. In this article, Table 1 presents the quarterly and annual movements for both options 1 and 2. 

Table 1. September 2020 quarter Trimmed Mean and Weighted Median, including and excluding imputed series
 Including imputed series (Option 1) Quarter (%)Including imputed series (Option 1) Annual (%)Excluding imputed series (Option 2) Quarter (%)Excluding imputed series (Option 2) Annual (%)
CPI1.60.71.60.7
Trimmed Mean0.41.20.31.4
Weighted Median0.31.30.21.4


Overall, excluding these five series from the Trimmed mean and Weighted median calculations (option 2) makes a small difference to the quarterly and annual movements in the September quarter. 

Chart 1 shows that when included in the calculations, four of the five imputed series contribute to the Trimmed Mean, with only one imputed series trimmed from the movement. Chart 2 shows the calculation of the two measures when the five imputed series are excluded.

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

Graph showing option one September quarter Trimmed mean and Weighted median including imputed series
Graph showing calculation of the trimmed mean and weighted median including imputed series (option 1). Four of the five imputed series are trimmed from the trimmed mean, with influential series such as Child care and Automotive fuel also removed.

Data for: September 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 September quarter Trimmed mean and Weighted median including imputed series
Graph showing calculation of the trimmed mean and weighted median excluding imputed series (option 2). Influential series such as Child care and Automotive fuel are trimmed from the trimmed mean.

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

Article archive

CPI enhancements

CPI feature articles

CPI 17th series review

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

Data Downloads

Time Series Spreadsheets

Data files

  • TABLES 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes

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  • TABLES 3 and 4. CPI: Groups, Weighted Average of Eight Capital Cities, Index Numbers and Percentage Changes

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  • TABLE 5. CPI: Groups, Index Numbers by Capital City

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  • TABLE 6. CPI: Group, Sub-group and Expenditure Class Contribution to Change in All Groups Indexes, by Capital City

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  • TABLE 7. CPI: Group, Sub-group and Expenditure Class, Weighted Average of Eight Capital Cities

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  • TABLE 8. CPI: Analytical Series, Weighted Average of Eight Capital Cities

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  • TABLE 9. CPI: Group, Sub-group and Expenditure Class, Index Numbers by Capital City

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  • TABLE 10. CPI: Group, Sub-group and Expenditure Class, Percentage change from corresponding quarter of previous year by Capital City

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  • TABLE 11. CPI: Group, Sub-group and Expenditure Class, Percentage change from previous quarter by Capital City

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  • TABLE 12. CPI: Group, Sub-group and Expenditure Class, Points Contribution, by Capital City

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  • TABLE 13. CPI: Group, Expenditure Class and Selected Analytical Series Index Numbers, Seasonally adjusted, Weighted Average of Eight Capital Cities

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  • TABLE 14. CPI: Expenditure Class, Combined seasonal adjustment factors, Weighted Average of Eight Capital Cities

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  • All time series spreadsheets

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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.

Methodology

Consumer Price Index, Australia methodology, September 2020

Media releases