Stephen Barber
Statistics Group
6 April 1998
Contents
Major Issues Summary
Introduction
In the Beginning
Purpose of the CPI
Calculation of the CPI
Latest CPI Review
Outcome of the Review
Consequences of the Review
Appendix A: Weighting pattern for the Consumer
Price Index in June quarter 1992
Appendix B: List of goods and services priced for
the CPI
Sources
Endnotes
-
- Retail price
indexes, which include the Consumer Price Index (CPI), have been
officially produced for the period since 1901.
-
- These indexes have predominantly been used for compensating
wage earners for increases in their living costs and were
constructed with this purpose in mind.
-
- The CPI, which was introduced in 1960, was of a better design
than the previous retail price indexes but was still designed
primarily for wage determination.
-
- Since its introduction, the CPI has also been used as a measure
of inflation and for indexing payments such as pensions. Both are
uses for which it was not designed and for which it is often
criticised.
-
- In the latest review of the CPI the Australian Bureau of
Statistics, after public consultation, decided to change the
methodology so that the CPI will be closer to a measure of
inflation and be more appropriate as a tool for indexation purposes
while still being relevant for wage determination.
-
- The new CPI (the 13th Series) will be introduced for
the September quarter 1998, released in late October 1998.
The present form of the Consumer Price Index
(CPI) was introduced in 1960. Its main purpose was for use in the
centralised wage determination process that existed in Australia at
the time and was to compensate for rises in the 'cost of living'
for a particular section of the population.
As such, the basis for its compilation was the
change in the overall cost of a representative basket of goods and
services purchased by wage and salary earner households in the
capital cities. The price changes for each of these goods and
services were combined using weights that reflected the importance
of the priced items in the total basket.
Approximately every five years the CPI is
reviewed. Usually changes are made to the basket of goods and
services to reflect the changing expenditure patterns of the target
wage and salary earner households. Items drop out and new items are
included and the weights attributed to the items are revised as the
relative importance of goods and services for the target households
change.
Over time, the use of the CPI has expanded from
input to wage negotiation processes-even though centralised wage
fixing finished in 1987-to include a measure of general inflation,
indexation of all sorts of payments and benefits and for economic
policy considerations, especially with the introduction of the
Treasury underlying rate of inflation.
With the recent rapid decline in interest rates,
the CPI has been subject to criticism from various quarters in
respect of its use for indexation and in its use as a general
measure of inflation. Both are uses for which it was not
intended.
The Australian Bureau of Statistics (ABS) has
recently announced changes to the CPI that will bring it closer to
being a more general measure of inflation and at the same time more
appropriate for indexation purposes.
Australia's first official retail price index(1)
was introduced in 1912, and backdated to 1901. It was compiled by
the then Commonwealth Bureau of Census and Statistics and was
called the A Series Index. Since then there have been four other
indexes prior to the introduction of the CPI in 1960. These indexes
were the B, C, and D Series Indexes and the Interim Retail Price
Index.
These series overlapped each other, had
different calculation methods and were for different purposes.
However, for wage adjustment purposes the A Series index was used
from 1913 to 1933, the D Series (a hybrid of the A and C Series
Indexes) for 1933-34 and the C Series from 1934 to 1953.
The Interim Retail Price Index (IRPI) replaced
the C series Index in 1954 for general statistical purposes,
although the C Series Index continued to be produced and was still
considered the official index. The IRPI was itself replaced by the
CPI.
The CPI was introduced in 1960 and estimated
back to 1948-49. As its predecessors, the CPI is a quarterly series
designed to measure price change in the retail goods and services
purchased by wage and salary earner households in the capital
cities.
The goods and services that are priced are
combined into a 'basket' typical of the spending habits of the
target wage and salary earner households. This basket remains fixed
for approximately five years after which time the CPI undergoes a
review. The review process is necessary to keep up to date with not
only the types of items that are purchased but also the importance
of these items within the households' expenditure.
This reviewing process is what distinguishes the
CPI from the earlier retail price indexes, which had their basket
of purchases fixed over the entire duration of the index. (The C
Series, however, did have one review in 1936 but this only made
slight changes to the basket).
Each review of the CPI produces a new CPI
series. These new series are called links and are chained together
to form one continuous CPI series. Currently, the CPI is in its
12th link since it was first compiled in 1960. The
previous CPI Series were linked in the following periods:
-
- 1st Series, June quarter 1949
-
- 2nd Series, June quarter 1952
-
- 3rd Series, June quarter 1956
-
- 4th Series, March quarter 1960
-
- 5th Series, December quarter 1963
-
- 6th Series, December quarter 1968
-
- 7th Series, December quarter 1973
-
- 8th Series, September quarter 1974
-
- 9th Series, September quarter 1976
-
- 10th Series, March quarter 1982
-
- 11th Series, December quarter 1986
-
- 12th Series, June quarter 1992.
The purpose of the CPI is to measure the
changes, over time, in retail prices of a fixed basket of goods and
services purchased by capital city wage and salary earner
households. The original use of the CPI was in the wage adjustment
process to compensate wage and salary earners for increases in the
cost of their day-to-day expenditures.
However, the CPI has also been adopted for
measuring changes in the cost of living and for measuring
inflation. Both of which it does not strictly do. A measure of cost
of living would use a changing basket (rather than a fixed basket)
showing consumers substituting items whose prices are becoming
relatively more expensive with those items that are becoming
relatively less expensive to maintain their living standard.
The CPI is not a measure of general inflation in
the true sense, either, because it:
-
- includes non-market transactions (such as government
services)
-
- includes the costs of purchasing or consuming goods and
services other than the retail prices (such as interest
rates)(2)
-
- does not cover the whole of the economy because it only
includes capital city wage and salary earner households
The CPI measures price changes, and movements
over time in the CPI reflect the (weighted) average change in the
prices of all the goods and services that comprise the CPI
'basket'.
The weights of goods and services that are
included in the basket are mainly determined with reference to
Household Expenditure Surveys (HES) that are conducted by the
ABS.
From HES, not only are the types of goods and
services that households are spending their money on identified,
but also how much of household spending goes on each of the items.
The goods and services, or items, are classified into 8 groups, 35
sub-groups and 107 expenditure classes.
Appendix A shows the classification structure of
the present CPI and the respective weightings (i.e. the proportion
of households' expenditure on each group, sub-group and expenditure
class) expressed in percentages(3). The expenditure classes sum
into sub-groups and the sub-groups sum to groups. For example, the
Housing group is 15.9% (or nearly a sixth) of the CPI
basket and the Housing group comprises the Rents
and Home Ownership sub-groups. The weightings shown are at
the June quarter 1992, which was the first quarter the present CPI
series was compiled. Appendix B gives a list of the items that are
priced each quarter.
Combining the changes in prices of items, from
the previous quarter, with their respective weightings in the CPI
basket gives an overall price change of the basket from the
previous quarter. This price change is applied to the CPI from the
previous quarter to calculate the index for the current
quarter.
The CPI always relates back to a specific base
period. At this base period the CPI is set equal to 100.0. The
current reference base period is the 1989-90 financial year. The
reference base period can be changed independently of a periodic
review and is usually done when the base period has become too far
in the past.
The current version of the CPI is the 12th
series. There have been twelve different versions of the basket of
goods and services relating to wage and salary earner capital city
households. It is important to note that the linking process, to
form one continuous CPI series, is done so that the change in the
composition of the basket does not of itself cause distortion in
the movement of the CPI. This is achieved by producing overlapping
CPI series for the quarter prior to the introduction of a new CPI
series.
In May 1997, the ABS released an information
paper announcing that the CPI was due for its next review. The ABS
considered that, rather than just amending the item weights, it was
also the time to 'reassess the scope and coverage of the index and
other methodological issues.'(4)
One of the main reasons for believing that a
more thorough and comprehensive review than usual was necessary was
that while the CPI had a fairly narrow use in the beginning, over
time its use has become much broader even to the point of moving
somewhat away from its original intention. Therefore, the ABS
wanted to find out whether users of the CPI considered that the CPI
should become more representative of its broader and newer
applications.
Also, the principal purpose of the CPI
(centralised wage determination) has certainly become less
important in the 1990s. Decentralisation of the wage process
through enterprise bargaining has occurred and wage increases are
now generally granted after taking into account productivity
increases and the enterprise's profitability position. The CPI is
used more in the setting of minimum wages, or safety net, based
also on award determinations by the Australian Industrial Relations
Commission and State tribunals and for the indexation of commercial
contracts and various government payments and charges. It also has
macroeconomic uses, in particular the direct calculation of the
Treasury underlying rate of inflation.(5)
Forty-seven submissions were received from
organisations and individuals. The ABS reviewed these submissions
and with the aid of a specially convened Advisory Group, made up of
a broad range of CPI users, decided on the following major
changes:
-
- the CPI will use the acquisitions(6) approach so it will no
longer include mortgage interest(7) or consumer credit charges. It,
therefore, will tend toward a specific measure of inflation (for
the household sector) and can more confidently be used as a general
indicator of inflation for the economy
-
- the scope of the CPI will be increased to include
all private sector households in the eight capital
cities. Therefore, the population covered will increase from 29% to
64% of Australian households and the weighting pattern will reflect
the purchases of these households, expanding the coverage from 34%
to 68% of Australian households' expenditure
-
- financial services fees, incorporating the myriad of bank
charges on all types of accounts and transactions plus financial
institutions duty and debits taxes, will comprise a new
(9th) group
-
- home computers and software, tertiary education fees and
domestic services will be added to the basket.
The first two points above were the major
outcomes. These changed the fundamental purpose of the CPI making
it closer to a measure of inflation and also to being more
representative of the types of households that are dependent on its
application as an indexation factor.
Two other points of interest from the review
are:
-
- the ABS will develop its own underlying measure of inflation
with the major feature of netting out the effects of changes in
indirect taxes. This means that government fiscal policy designed
to reduce inflationary pressures will not be seen in the index as
producing the opposite effect, and
-
- the ABS will develop indexes for subgroups of the population,
although these indexes will be for analytical purposes and will
only be published (approximately) annually.
The details of the review, its outcomes and
other changes to be made to the CPI can be found in the ABS
Information Paper 'Outcome of the 13th Series
Australian Consumer Price Index Review, 1997' (catalogue no.
6453.0) released on 12 November 1997.
The 13th Series CPI will be
introduced from the September quarter 1998 and released in late
October this year. (It will be linked to the 12th Series
in the June quarter).
With the exclusion of interest charges (mortgage
and consumer credit) and the adoption of the acquisitions approach
the 13th Series CPI will move closer to a measure of
inflation. Since the scope of the CPI will be increased to include
all private households in the capital cities, this measure of
inflation will specifically be for the private household sector.
However, because of the high proportion of the population that will
now be covered, it will also be a more useful measure of general
inflation.
Private households whose only incomes are
derived from such sources as pensions, social security benefits and
superannuation payments will now be part of the CPI process and
their expenditure patterns will be included in producing the CPI
basket of goods and services. Their direct involvement, combined
with the exclusion of mortgage interest charges, should make the
CPI more relevant to them.
This is particularly important since these types
of households rely on the CPI to index their sources of income.
Many of these types of household are also low income households and
they may benefit too as the new CPI will be a 'more appropriate
measure for input to the process for adjusting the award safety net
by the Australian Industrial Relations Commission.'(8)
It has been argued that the recipients of many
types of payments have been adversely affected by having their
payments indexed by the current CPI, especially because of the
interest charges component. With the removal of these components
this should no longer be the case.
However, it is now argued that these recipients
will also be disadvantaged by the new CPI because interest charges
are not part of it. This is not because the CPI is not relevant but
because of the timing of its introduction. The introduction of the
13th Series CPI, in late October 1998, will probably
coincide with the economy still at or around the low point of the
interest rate cycle. When interest rates rise again in the future
the payments will not be indexed for this rise and therefore
pensioners will have been disadvantaged twice. Firstly, under the
current CPI there have been no indexation increases in the last 12
months predominantly due to the rapid decline in mortgage interest
charges, and, under the 13th series CPI they will not
receive any rise that would have been attributed to increases in
mortgage interest rates.(9)
This is one possible scenario and will only be
relevant if home loan interest rates increase more rapidly in
relation to other prices. An alternative scenario is that
pensioners actually may be better off if mortgage interest charges
increase, but increase more slowly than prices of other items that
make up the CPI basket of goods and services. In this case, if
mortgage rates were included they would act as a dampener and the
increase in the CPI would be less than if mortgage rates were
excluded. This may be a more realistic scenario especially if food
prices rise rapidly. Since the expenditures of pensioner and other
non-wage and salary earner households will be part of the CPI
basket then it is conceivable that food will have a greater weight
than the current 18% (see Appendix A).
Pensions, however, are no longer tied solely to
the CPI. With legislation(10) passed last year there is now a
safety net which, although it has been operating de facto
over the last decade or so, also ties the single rate of pension to
25% of average weekly total earnings for all male employees.
Therefore, in periods where wages are increasing
faster than inflation, pensions may receive an extra increase above
the CPI indexed amount if their level becomes less than 25% of
average earnings. The first such increase to the single rate of
pension under this new legislation will be paid on 2 April this
year with a $3.40 per week rise.(11)
Finally, as previously described, when a new CPI
series is joined to the existing series the linking process
maintains the integrity of the series by only showing price
movements. The difference in the costs of the old and new baskets
of goods and services does not influence the level of the CPI. This
is correct when looking at the quarter-to-quarter change across the
link but for other longer-term movements that cross the link, e.g.
six monthly (two quarters) or annual, there may be an effect. For
example, if the present economic conditions prevail after the
linking of the new CPI series the exclusion of mortgage interest
charges will produce an increase in the longer-term movements in
the CPI. This increase in the CPI will occur even if no other
prices rise because the current dampening effect of mortgage
interest charges will have been omitted. However, this will not
affect the Treasury underlying rate of inflation measure as
mortgage interest charges have never been included in its
calculation.
Eight capital cities combined
Group, sub-group, expenditure class
|
Percentage contribution to the All groups CPI in June quarter
1992
|
Group total
|
Sub-Group total
|
Expenditure class
|
Food
|
18.324
|
|
|
Dairy products
|
|
1.463
|
|
Milk and cream
|
|
|
0.895
|
Cheese
|
|
|
0.373
|
Butter
|
|
|
0.055
|
Other dairy products
|
|
|
0.140
|
Cereal products
|
|
2.097
|
|
Bread
|
|
|
0.867
|
Cakes and biscuits
|
|
|
0.773
|
Breakfast cereals
|
|
|
0.252
|
Other cereal products
|
|
|
0.205
|
Meat and seafoods
|
|
3.001
|
|
Beef and veal
|
|
|
0.736
|
Lamb and mutton
|
|
|
0.363
|
Pork
|
|
|
0.177
|
Poultry
|
|
|
0.401
|
Bacon and ham
|
|
|
0.308
|
Processed meat
|
|
|
0.690
|
Fish
|
|
|
0.326
|
Fresh fruit and vegetables
|
|
1.417
|
|
Fresh fruit
|
|
|
0.690
|
Fresh potatoes
|
|
|
0.121
|
Other fresh vegetables
|
|
|
0.606
|
Processed fruit and vegetables
|
|
0.829
|
|
Processed fruit
|
|
|
0.140
|
Fruit juice
|
|
|
0.419
|
Processed vegetables
|
|
|
0.270
|
Soft drinks, ice cream and confectionery
|
|
2.890
|
|
Soft drinks and cordials
|
|
|
1.212
|
Ice cream and ice confectionery
|
|
|
0.354
|
Confectionery
|
|
|
1.324
|
Meals out and take away foods
|
|
4.959
|
|
Meals out
|
|
|
1.818
|
Take away foods
|
|
|
3.141
|
Other Food
|
|
1.668
|
|
Eggs
|
|
|
0.121
|
Sugar
|
|
|
0.056
|
Jams, honey and sandwich spreads
|
|
|
0.149
|
Tea, coffee and food drinks
|
|
|
0.289
|
Food additives, sauces and spices
|
|
|
0.242
|
Margarine
|
|
|
0.130
|
Cooking oils and fats
|
|
|
0.084
|
Other food
|
|
|
0 597
|
Clothing
|
6.264
|
|
|
Men's and boy's clothing
|
|
1.686
|
|
Men's outer clothing
|
|
|
0.680
|
Men's knitwear
|
|
|
0.158
|
Men's shirts
|
|
|
0.317
|
Men's underwear, nightwear and socks
|
|
|
0.149
|
Boy's clothing
|
|
|
0.382
|
Women's and girl's clothing
|
|
2.545
|
|
Women's outer clothing
|
|
|
1.640
|
Women's knitwear
|
|
|
0.196
|
Women's underwear, nightwear and hosiery
|
|
|
0.345
|
Girl's clothing
|
|
|
0.364
|
Fabrics and knitting wool
|
|
0.746
|
0.746
|
Footwear
|
|
1.063
|
|
Men's footwear
|
|
|
0.354
|
Women's footwear
|
|
|
0.457
|
Children's footwear
|
|
|
0.252
|
Dry cleaning and shoe repairs
|
|
0.224
|
0.224
|
Housing
|
15.900
|
|
|
Rents
|
|
4.865
|
|
Privately-owned dwelling rents
|
|
|
4.483
|
Government-owned dwelling rents
|
|
|
0.382
|
Home ownership
|
|
11.035
|
|
Mortgage interest charges
|
|
|
6.608
|
Local government rates and charges
|
|
|
2.190
|
House repairs and maintenance
|
|
|
1.827
|
House insurance
|
|
|
0.410
|
Household equipment and operation
|
18.370
|
|
|
Fuel and light
|
|
2.339
|
|
Electricity
|
|
|
1.752
|
Gas
|
|
|
0.531
|
Other fuel
|
|
|
0.056
|
Furniture and floor coverings
|
|
4.344
|
|
Furniture
|
|
|
3.505
|
Floor coverings
|
|
|
0.839
|
Appliances
|
|
1.538
|
1.538
|
Household textiles
|
|
0.754
|
|
Bedding
|
|
|
0.353
|
Towels, linen and curtains
|
|
|
0.401
|
Household utensils and tools
|
|
1.212
|
|
Tableware, glassware and cutlery
|
|
|
0.261
|
Kitchen and cooking utensils
|
|
|
0.382
|
Cleaning utensils
|
|
|
0.084
|
Tools
|
|
|
0.485
|
Household supplies and services
|
|
3.970
|
|
Household cleaning agents
|
|
|
0.671
|
Household paper products
|
|
|
0.457
|
Other household non-durables
|
|
|
0.857
|
Stationery
|
|
|
0.429
|
Watches and clocks
|
|
|
0.121
|
Veterinary services
|
|
|
0.121
|
Pet foods
|
|
|
0.485
|
Travel goods
|
|
|
0.270
|
House contents insurance
|
|
|
0.382
|
Repairs to appliances
|
|
|
0.177
|
Postal and telephone services
|
|
1.715
|
|
Postal services
|
|
|
0.168
|
Telephone services
|
|
|
1.547
|
Consumer credit charges
|
|
2.498
|
2.498
|
Transportation
|
15.967
|
|
|
Private motoring
|
|
14.755
|
|
Motor vehicles
|
|
|
3.989
|
Automotive fuel
|
|
|
4.698
|
Vehicle insurance
|
|
|
2.106
|
Motoring charges
|
|
|
0.839
|
Tyres and tubes
|
|
|
0.345
|
Vehicle servicing, repairs and parts
|
|
|
2.778
|
Urban transport fares
|
|
1.212
|
1.212
|
Tobacco and alcohol
|
7.475
|
|
|
Alcoholic drinks
|
|
5.061
|
|
Beer
|
|
|
2.927
|
Wine
|
|
|
1.016
|
Spirits
|
|
|
1.118
|
Cigarettes and tobacco
|
|
2.414
|
2.414
|
Health and personal care
|
6.850
|
|
|
Health services
|
|
3.961
|
|
Hospital and medical services
|
|
|
3.150
|
Optical services
|
|
|
0.177
|
Dental services
|
|
|
0.634
|
Personal care products
|
|
2.097
|
|
Pharmaceuticals
|
|
|
0.820
|
Toiletries and personal products
|
|
|
1.277
|
Hairdressing services
|
|
0.792
|
0.792
|
Recreation and education
|
10.850
|
|
|
Books, newspapers and magazines
|
|
1.146
|
1.146
|
Recreation goods
|
|
2.564
|
|
Video and sound equipment
|
|
|
0.802
|
Records, cassettes and tapes
|
|
|
0.308
|
Sports and photographic equipment and toys
|
|
|
1.454
|
Holiday travel and accommodation
|
|
2.349
|
|
Holiday travel and accommodation in Australia
|
|
|
1.296
|
Holiday travel and accommodation overseas
|
|
|
1.053
|
Recreation services
|
|
2.852
|
|
Photographic services
|
|
|
0.242
|
Repairs to recreational goods
|
|
|
0.112
|
Entertainment
|
|
|
2.498
|
Education and child care
|
|
1.939
|
|
Education fees
|
|
|
1.557
|
Child care fees
|
|
|
0.382
|
Total all groups
|
100.000
|
100.000
|
100.000
|
Across the eight capital cities approximately
100,000 price quotations are collected each quarter. There are some
local variations in the items priced.
While it is not practical to reproduce a
complete list of the goods and services priced, the following list
gives an indication of the kinds of items priced in each
expenditure class.
Group, sub-group, expenditure class
|
Items priced
|
Food
|
Dairy products
|
Milk and cream
|
Fresh and flavoured milk; cream
|
Cheese
|
Processed; natural
|
Butter
|
First quality
|
Other dairy products
|
Yoghurt; powdered milk
|
Cereal products
|
Bread
|
Various sizes and types
|
Cakes and biscuits
|
Cakes, biscuits; frozen fruit pies
|
Breakfast cereals
|
Corn and wheat based
|
Other cereal products
|
Flour; rice; pasta
|
Meat and seafoods
|
Beef and veal
|
Steak; roast; mince
|
Lamb and mutton
|
Chops; leg
|
Pork
|
Chops; leg
|
Poultry
|
Fresh and frozen chicken
|
Bacon and ham
|
Middle rashers; ham
|
Processed meat
|
Canned; cooked; salami; sausages
|
Fish
|
Fresh; canned; frozen
|
Fresh fruit and vegetables
|
Fresh fruit
|
Oranges; apples; bananas; pears; pineapples; peaches; plums;
grapes; strawberries; grapefruit; mandarins; watermelons
|
Fresh potatoes
|
Washed and unwashed; loose and pre-packed
|
Fresh vegetables
|
Beans; carrots; cabbages; lettuces; tomatoes; pumpkin; onions;
cauliflower; mushrooms; celery
|
Processed fruit and vegetables
|
Processed fruit
|
Canned; dried
|
Fruit juice
|
Fresh; tetra pack
|
Processed vegetables
|
Frozen; canned
|
Soft drinks, ice cream and confectionery
|
Soft drinks and cordials
|
Carbonated-bottles and cans; bottled liquid concentrates;
mineral water
|
Ice cream and ice confectionery
|
Various size packs; milk and water based confectionery
|
Confectionery
|
Chocolate; sugar and savoury confectionery; nuts
|
Meals out and take away foods
|
Meals out
|
Restaurant; cafeteria
|
Take away foods
|
Cooked chicken; pizzas; hamburgers; meat pies; sandwiches
|
Other food
|
Eggs
|
Dozen packs, various sizes
|
Sugar
|
White, granulated
|
Jams, honey and sandwich spreads
|
Jam; honey; peanut butter
|
Tea, coffee and food drinks
|
Tea-packets and bags; instant coffee; chocolate-based drinks
|
Food additives, sauces and spices
|
Sauces; spices; salad dressings
|
Margarine
|
Polyunsaturated and other
|
Cooking oils and fats
|
Cooking oil
|
Other food
|
Soups; baked beans; canned baby food; frozen meat pies; frozen
pizzas
|
Clothing
|
Men's and boys' clothing
|
Men's outer clothing
|
Suits; trousers; jeans; overalls; shorts
|
Men's knitwear
|
Jumpers; cardigans; pullovers
|
Men's shirts
|
Business; casual
|
Men's underwear, nightwear and socks
|
Briefs; singlets; pyjamas; socks
|
Boys' clothing
|
Jeans; shorts, shirts; underwear; pyjamas; knitwear
|
Women's and girls' clothing
|
Women's outer clothing
|
Frocks; skirts; blouses; jeans; slacks; coat
|
Women's knitwear
|
Jackets; cardigans; jumpers
|
Women's underwear, nightwear
|
Foundation garments; briefs; nightdresses; hosiery; pyjamas;
pantyhose
|
Girls' clothing
|
Jeans; frocks; skirts; blouses; underwear; nightwear;
knitwear
|
Fabrics and knitting wool
|
Fabrics; knitting wool; haberdashery
|
Footwear
|
Men's footwear
|
Shoes; boots; slippers; joggers; thongs
|
Women's footwear
|
Dress and casual shoes; slippers; thongs
|
Children's footwear
|
School shoes; casual shoes; boots; thongs
|
Dry cleaning and shoe repairs
|
Dry cleaning; shoe repairs
|
Housing
|
Rents
|
Privately-owned dwelling rents
|
Houses; flats
|
Government-owned dwelling rents
|
Houses; flats
|
Home ownership
|
Mortgage interest charges
|
Interest rates charged on mortgages
|
Local government rates and charges
|
Council rates and charges; water and sewerage rates and
charges
|
House repairs and maintenance
|
Repair materials; paints; tradesmen's labour charges
|
House insurance
|
Comprehensive insurance of dwellings
|
Household equipment and operation
|
Fuel and light
|
Electricity
|
Domestic tariffs
|
Gas
|
Mains; bottled
|
Other fuel
|
Heating oil; kerosene
|
Furniture and floor coverings
|
Furniture
|
Kitchen; bedroom; dining; lounge room
|
Floor coverings
|
Carpets; hard floor coverings
|
Appliances
|
Refrigerators; freezers; washing machines; dryers; stoves; small
appliances; dishwashers; microwave ovens; vacuum cleaners;
airconditioners
|
Household textiles
|
Bedding
|
Blankets; bedspreads; sheets; pillowcases; continental
quilts
|
Towels, linen and curtains
|
Towels; tea towels; table linen; curtains
|
Household utensils and tools
|
Tableware, glassware and cutlery
|
Dinner settings; glassware; cutlery
|
Kitchen and cooking utensils
|
Saucepans; frypans; ovenware; kettles; plastic utensils
|
Cleaning utensils
|
Brooms; mops; garbage bins; dustpans
|
Tools
|
Lawnmowers, garden and hand tools, electric drills, paint
brushes
|
Household supplies and services
|
Household cleaning agents
|
Detergents; polishes; cleaning liquids
|
Household paper products
|
Toilet paper; facial tissues
|
Other household non-durables
|
Garden supplies; insecticides; matches; batteries; air
fresheners; wrapping film; garbage bags
|
Stationery
|
Greeting cards; writing pads exercise books; envelopes; pens;
pencils; sticky tapes; correction fluid
|
Watches and clocks
|
Men's and women's watches; household clocks
|
Veterinary services
|
Veterinarians' fees for treatment of household pets
|
Pet foods
|
Canned; dried
|
Travel goods
|
Suitcases; handbags; wallets; umbrellas
|
House contents insurance
|
Comprehensive insurance cover for household contents
|
Repairs to appliances
|
Washing machine service charges
|
Postal and telephone services
|
Postal services
|
Letters (domestic and overseas); parcels.
|
Telephone services
|
Local, STD and overseas calls; telephone rental
|
Consumer credit charges
|
Interest rates charged on personal loans; credit cards
|
Transportation
|
Private motoring
|
Motor vehicles
|
New cars; new motor cycles
|
Automotive fuel
|
Petrol: leaded and unleaded
|
Vehicle insurance
|
Comprehensive; third party compulsory; third party property
|
Motoring charges
|
Registration; driver's licence; parking fees; organisation
membership
|
Tyres and tubes
|
Passenger car radial tyres; retreads
|
Vehicle servicing, repairs and parts
|
Batteries; oil; mechanical and electrical parts; car supplies;
smash repair parts; mechanics' labour charges; smash repair labour
charges; insurance excess
|
Urban transport fares
|
Bus; train; tram; ferry; taxi
|
Tobacco and Alcohol
|
Alcoholic drinks
|
Beer
|
Full strength and low alcohol draught; bottles; cans
|
Wine
|
Bottles; casks; restaurant wine
|
Spirits
|
Bottles; bar sales
|
Cigarettes and tobacco
|
Cigarettes (cartons and single packs); pipe and cigarette
tobacco
|
Health and Personal Care
|
Health services
|
Hospital and medical services
|
Health insurance contributions; doctors' fees (net of Medicare
and fund benefits)
|
Optical services
|
Consultations; prescription lenses and frames
|
Dental services
|
Dentists' fees
|
Personal care products
|
Pharmaceuticals
|
Prescription medicines; proprietary medicines; dressings;
vitamins; antiseptics
|
Toiletries and personal products
|
Cosmetics; talc powder; toilet soap; toothpaste; shampoos and
conditioners; razor blades; hair dryers
|
Hairdressing services
|
Men's; women's; boys'
|
Recreation and Education
|
Books, newspapers and magazines
|
Books; magazines; morning, evening and weekend newspapers
|
Recreational goods
|
Video and sound equipment
|
Colour TVs; video recorders; radios; cassette recorders; compact
disc players; sound equipment
|
Records, cassettes and tapes
|
Compact discs; pre-recorded cassettes; blank audio and video
cassettes
|
Sports and photographic equipment and toys
|
Sports equipment; cameras and films; toys; games; bicycles
|
Holiday travel and accommodation
|
Holiday travel and accommodation in Australia
|
Air, bus and rail fares; hotel, motel and caravan park charges;
package tours
|
Holiday travel and accommodation overseas
|
Airfares; hotel charges; package tours
|
Recreational services
|
Photographic services
|
Film processing and printing
|
Repairs to recreational goods
|
TV and video recorder repair charges
|
Entertainment
|
Admission charges - cinema, theatre, sporting (participation and
non-participation), non-sporting; T.V. and video recorder hire
charges; hire of video tapes
|
Education and child care
|
Education fees
|
Private (primary and secondary) and government (primary and
secondary) schools
|
Child care fees
|
Pre-schools; child care centres
|
Australian Bureau of Statistics (ABS),
Information Paper, 'Issues to be Considered During the
13th Series Australian Consumer Price Index Review,
1997', catalogue no. 6451.0
ABS, Information Paper, 'Outcome of the
13th Series Australian Consumer Price Index Review,
1997', catalogue no. 6453.0
ABS, The Australian Consumer Price Index,
Concepts, Sources and Methods, catalogue no. 6461.0
ABS, Information Paper, 'An Analytical
Framework for Price Indexes in Australia, 1997', catalogue no.
6421.0
ABS, A Guide to the Consumer Price Index,
Twelfth Series, catalogue no. 6440.0
ABS, Consumer Price Index, Australia
(quarterly), catalogue no. 6401.0
Department of the Treasury, Treasury
Submission to the Thirteenth Series CPI Review.
-
- The CPI is a retail price index. The name was changed to
conform to international practices in the naming of indexes.
- Interest rates are the price of money or the relative price of
purchasing an item today rather than in the future. As such an
interest rate change does not really say anything about the current
price changes of goods and services. Also, interest charges in any
period do not directly relate to the purchasing of specific goods
or services in that period. By including interest rates, a rise in
interest rates introduced to retard inflation will actually be
shown as an inflationary increase.
- Between CPI reviews the group, sub-group and expenditure class
weights remain fixed, however, below the expenditure class level
weights are allowed to vary to reflect changing market
circumstances.
- ABS, Information Paper, 'Issues to be Considered
During the 13th Series Australian Consumer Price Index
Review, 1997', catalogue no. 6451.0, page v.
- The Treasury underlying rate of inflation was developed to more
closely measure the short-term inflationary pressures in the
economy that are predominantly due to market forces. It is
calculated directly from the CPI by excluding those items in the
CPI basket of goods and services that are affected by highly
volatile factors, seasonal factors or government policy decisions.
(This amounts to almost half the CPI basket being excluded).
- The adoption of the acquisitions approach means that only goods
and services acquired during the period are included in the CPI
basket. This differs from the outlays approach which is used at
present. The outlays (or payments) approach also includes in the
basket payments, such as interest charges, which are unavoidable
costs of acquisition or consumption. The acquisitions approach
produces a measure of inflation while the outlays approach
determines changes in purchasing power and hence its use for wage
determination.
- Mortgage interest charges is an expenditure class in the home
ownership sub-group of the current CPI. This will now be replaced
by a new expenditure class that measures purchases of new dwellings
(excluding land) and the cost of alterations and additions to
existing dwellings.
- ABS, Information Paper, 'Outcome of the
13th Series Australian Consumer Price Index Review,
1997', catalogue no. 6453.0, page 6.
- This same argument has been put forward by holders and dealers
of Treasury indexed bonds, although any detrimental effect (if at
all) would only be in the short-term, probably the next 2-3 years.
Since these types of bonds are considered long-term (less risky)
investments they should still achieve their objective, which is to
get a long-term return over and above the rate of inflation.
- Social Security and Veterans' Affairs Amendment (Male Total
Weekly Earnings Benchmark) Act 1997.
- There was no indexation increase due to the CPI, so the $3.40
increase was due solely to the new legislation.