MNI: Australia ABS Plans Monthly CPI But Could Take Upto 2 Yrs

By Sophia Rodrigues

     SYDNEY (MNI) - The Australian Bureau of Statistics has begun development

work on publishing a monthly consumer price index, a key monthly statistic

keenly sought by the Reserve Bank of Australia, but the first publication is

expected to take at least two years.

     In a media release published Wednesday, the ABS said it has recently begun

work to determine the feasibility of producing a monthly CPI to meet the demand

for this key indicator to be published on a monthly basis, rather than

quarterly. 

     Back in 2010, a major review by the ABS had found the need for this monthly

indicator but the additional funding required to meet the costs was a key reason

why it never materialized. Over the past few years, however, the expected cost

to produce a monthly CPI has significantly reduced from A$15 million estimated

in 2010, and is one of the reasons why the ABS is now pursuing this.

     However, the first publication could take at least two years because the

ABS estimates the development phase of the project to take around 12 months, and

an additional period of 12 months where the monthly price collection is

implemented. 

     "This enables sufficient time to imbed the monthly collection and conduct a

parallel run with the quarterly CPI. It will then ensure that when the monthly

CPI is first published, an annual movement will also be available," a paper

issued by the ABS said.

     The RBA has long advocated for a monthly CPI. In a speech in October 2017,

Deputy Governor Guy Debelle elaborated on this when he said that in the case of

inflation, a more frequent estimate would help to identify changes in the trend

in inflation sooner.

     He admitted that it might probably come with more noise, but the RBA has

ways to deal with that. 

     "At the moment, we need to wait three more months to gain a better

understanding as to whether any particular read on inflation is signalling a

possible change in trend or is just noise. That is one of the reasons why the

RBA has long advocated a shift to monthly calculation of the CPI," he said.

     The ABS' plan is to issue monthly CPI and also continue with the quarterly

release. Not all quarterly data will be included in the monthly release but the

ABS intends to publish important analytical series like seasonally adjusted CPI,

trimmed mean, weighted median, tradables, non-tradables, goods, services, CPI

including deposit and loan facilities, CPI excluding volatile items and various

CPI excluding measures.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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