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An increased frequency of inflation reports is crucial when prices are rising fast, says CPA Australia.
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ABS move to monthly CPI ‘will benefit economy’
11 August 2022
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The ABS has confirmed it will begin monthly updates of the consumer price index in a move welcomed by the accounting profession.
The shift away from quarterly reporting, which begins in October, put Australia in line with advanced economies including the US, UK and Japan, CPA Australia said.
Australian statistician Dr David Gruen AO said that the updated indicator would be an improved tool for policymakers and businesses alike, and the ABS would release an information paper outlining the specifics of monthly CPI on 16 August.
“The information paper will show how the monthly CPI indicator can provide an earlier guide to inflation developments, particularly in times of significant change,” said Dr Gruen.
“One important point of distinction with the monthly indicator is that, while it will include prices for all the items in the CPI basket, not all these prices will be updated each month.”
CPA Australia, a critic of quarterly CPI reporting as the basis for RBA decisions, praised the ABS for the change.
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“With this announcement, the ABS has demonstrated its willingness to be responsive to the needs of the community and embrace new lower cost data sources to deliver monthly updates,” said general manager media and content, Dr Jane Rennie.
“In June we raised the alarm that Australian governments, businesses and others were reliant on out-of-date inflation data. Quarterly CPI reporting puts Australian governments, regulators and businesses at a distinct disadvantage, especially in economically uncertain times like now.
“Using quarterly CPI data when the majority of the world receives it monthly is like waiting for a letter in the post when neighbours are receiving updates by phone.”
Dr Rennie said the change was crucial in the current high inflation environment.
“A monthly CPI indicator will enable a clearer understanding of the effects of monetary policy, geopolitical tensions, supply chain disruptions and local interventions on prices across the Australian economy,” she said.
“Australia’s economy will benefit as a result.”
The ABS said the quarterly CPI indicator would continue to be the key measure of inflation with the monthly indicator an additional aid that provides quicker insights, rather than a replacement.
It said switching to monthly figures was only possible due to lower data collection costs created by new sources.
“The monthly CPI indicator has been made feasible by using new data sources to reduce data collection costs, particularly scanner data and web-scraping techniques to provide high-frequency data at lower cost,” said Dr Gruen.
“The use of new data sources has seen the ABS generate a range of timely new insights across the economy without asking more of Australian businesses and households.”
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