Abs Says Wave Goodbye To Cpi
Sydney Morning Herald
Tuesday February 25, 1997
The Australian Bureau of Statistics is considering a big overhaul of inflation figures, with a new measure of the cost of living to replace the Consumer Price Index and improved presentation of the current suite of indexes.
In a discussion paper released late yesterday, the ABS suggested the cost-of-living measure could be used to index federal benefits, which could save the Government millions of dollars.
Concerns raised recently in the United States, where the CPI was found to overstate inflation by an estimated one percentage point, would also be investigated by the ABS.
The new cost-of-living measure, dubbed the Household Consumption Purchases (HCP) index by the ABS, would exclude interest rates and non-market determined prices, and could be produced monthly or quarterly, although a monthly index would require some extra data to be collected.
The current underlying measure, now targeted by the Reserve Bank, would also be subject to change.
"In recognition of the increased attention being given to measures of underlying inflation, alternative methods of abstracting from the effects of changes in indirect taxes and subsidies, seasonality and volatility are considered," the paper said.
A further "pure" measure of inflation would also be developed, it said. The ABS set out its ideal measure of inflation, which would be based on market transactions, excluding the implied rent from owning a home and interest rates. It would cover the whole economy and have very recent weightings for goods, rather than the current five-year review.
The ABS is also concerned that a suite of price indexes - including export and import prices, building materials and manufacturing input and output prices - are not well understood or used by most analysts, and the ABS is considering drawing the series together, presenting them as a "system or family of price indexes".
© 1997 Sydney Morning Herald