AceBreakingNews – As It Happened: The ABS says it needs to regularly update its CPI expenditure weights to ensure that the weights it applies to the CPI basket reflect contemporary household spending patterns.

Ace Press News From Cutting Room Floor: Published: Feb.28: 2024: ABC Market Live News: TELEGRAM Ace Daily News Link https://t.me/+PuI36tlDsM7GpOJe

It will be updating the weights in its monthly CPI indicator every January, so that’s what it’s just done. And here’s what it says about today’s changes:

“The CPI weights reflect the relative amount spent on goods and services as a proportion of total expenditure by all households.

“Over the past couple of years there has been a shift away from spending on goods towards services.

“Following the onset of the COVID-19 pandemic there was strong demand for goods such as household appliances, furniture and audio visual and computing equipment. Lockdowns and border closures saw spending fall for services such as restaurant meals and holiday travel. This resulted in the contribution of Goods reaching 58% of the CPI basket and 42% for Services.

“For the 2024 updated CPI weights, the contribution of Goods has fallen to 54.5% and Services increased to 45.5%, which reflects spending patterns closer to the pre-COVID-19 period.”

You can see its changes in the table below:

So, the ABS is saying that peoples’ spending habits have changed a bit in the last 12 months, and it’s had to update the weightings it applies to each expenditure category in its monthly CPI survey to try to make the headline figure as realistic as possible.

As an example of the real-life changes in economic activity the ABS is trying to account for in its re-weightings this year, it has this to say about housing:

“The weight for the Housing group fell 0.50 percentage points [in this update] due to a decrease in the weight for New dwellings purchase by owner-occupiers (-0.55pp). There were fewer dwelling commencements in 2023 as economic uncertainty and higher interest rates led to reduced new dwelling construction as reflected in lower building approvals and new loan commitments for construction and purchase of new dwellings.

“The weight for Rents increased 0.28pp as vacancy rates remained at historic lows, which saw rental prices increase by 7.3% in the 12 months to the December 2023 quarter, more than the overall CPI increase of 4.1%.

“Similarly, higher electricity prices, which rose 6.9% in the 12 months to December 2023, has led to an increase in the weight for Electricityof 0.14pp.”

After today’s update, the ABS says the largest weight for the next 12 months remains for the Housing group (21.74%), followed by Food and non-alcoholic beverages (17.15%), Recreation and culture (12.55%) and Transport (11.42%).

At Sterling Publishing & Media Service Agency, we strive for transparency and accountability. Please note that we are not responsible for any external content, links, or posts. However, we remain committed to providing high-quality services and appreciate your support. Thank you.

@acenewsservices