Post on 21-Jan-2016
transcript
Review of the Australian CPI
Introduction• Minor review
– 6 yearly– update weights using household expenditure survey
(HES)
• Major review– longer intervals– update weights– topical issues
Major issues• i. Principal purpose of the CPI
• ii. Compilation frequency of the CPI
• iii. Evaluation of the deposit and loan facilities index
• iv. Maintaining the relevance of the CPI
• v. Commodity classification
• vi. Analytical series
• vii. Other issues
User engagementAdvisory group
15 Members representing
•Reserve Bank•Government departments•Academics•Statistics New Zealand•State governments
User engagementInformation paper
www.abs.gov.au
User engagement“Road” show Advertised in
major newspapers
Mail out to 150 users
Eight capital cities
User engagement
Modern methods
User engagementSubmissions
• 52 written submissions
• 25 from organisations
• 27 from individuals
Public forums
• 80 attendees
Principal purpose of the CPI• Current principal purpose - measurement of household
inflation• Acquisitions approach (CPI 1998 – present)• Outlays approach (CPI 1960 – 1998) • Additional series such as the Analytical living cost index
(ALCI) and the Pensioner and beneficiary living cost index (PBLCI).
Analytical living cost indexes for selected household types
Employee households Age pensioner households
Self-funded retiree householdsOther government transfer
recipients households
Pensioner and beneficiary living cost index
Principal purpose of the CPI• Users agreed that the principal purpose
(household inflation) should remain unchanged
Compilation frequency• Currently quarterly• Calls for a monthly CPI • Arguments for a monthly CPI
– All OECD countries except Australia and New Zealand compile monthly
– IMF specifies CPIs should be monthly– More timely economic feedback and greater ability to pick
turning points
• Arguments against a monthly CPI– Complexity, quality and cost.
Compilation frequency
Monthly CPI• full replication of current quarterly
methodology• use of existing data
Compilation frequency
• strong but mixed views• financial and economic circles - strongly in
favour of monthly CPI provided current quality was maintained
• other users - no compelling need to change from quarterly
• concern about how move would be funded
Financial services
• indirect fees via interest rate margins– users agree that these should be included
• affected by volatility in interest rates• volatility during the global financial crisis• weight questioned• methodology not well understood
Maintaining the relevance of the CPI• 6-yearly weight updates
– users supported more frequent HES to enable CPI weights to be updated more often
– use of scanner data, for more frequent weight updates
• quality adjustment– users bothered by computers/cars
Commodity classification
• Australian CPI Commodity Classification (CPICC) only loosely based on COICOP but not strictly
• Should the CPICC concord with industry classifications such as the Input-Output Product Classification (IOPC)?
Analytical seriesExclusion-based measures• all groups excluding Housing & Financial and insurance
services• all groups excluding 'volatile items'
Consumer price measures & seasonal adjustment• trimmed mean• weighted median
Tradeable and non-tradeable components
Analytical series• user consensus on the value and
importance of current analytical series • most comments requested additional data• several requests for seasonally adjusted
CPI. However, universal preference for an unadjusted/ unrevised headline CPI
Other issuesSpatial index:•Between capital cities•Between capital cities and regional zones
Geographic coverage of CPI:Interest in expanded coverage outside capital cities