Consumer Price Index (Australia)

The Consumer Price Index (CPI) is Australia’s principal measure of household consumer price inflation. Compiled by the Australian Bureau of Statistics (ABS), it tracks changes in the price of a representative basket of goods and services purchased by Australian households and is used in monetary policy, economic analysis, contracts and public debate.^[1]

Overview

Australia’s CPI is a price index rather than a measure of the cost of living for any single household. It summarises how the prices of goods and services bought by households change over time, using expenditure weights to reflect the relative importance of different categories in aggregate household spending. The ABS describes the CPI as a general measure of price change for goods and services purchased by Australian households.^[2]

The CPI is commonly reported as an index number and as a percentage change. A monthly percentage change compares the index with the previous month, while an annual or year-ended rate compares the index with the corresponding month a year earlier. The ABS also publishes analytical series that help users interpret the data, including seasonally adjusted CPI, trimmed mean inflation, weighted median inflation, goods and services components, tradables and non-tradables, and measures excluding selected volatile items.^[2]

In Australian finance and macroeconomics, the CPI is closely connected to the Reserve Bank of Australia (RBA) and the Australian cash rate. The RBA’s inflation target is expressed in terms of consumer price inflation, specifically the percentage change in the CPI. The target is to keep annual consumer price inflation between 2 and 3 per cent over time, with monetary policy set so that inflation is expected to return to the midpoint of the target.^[3]

Institutional responsibility

The CPI is compiled and published by the ABS, Australia’s national statistical agency. The ABS publishes the CPI in the release *Consumer Price Index, Australia*, together with data downloads, commentary and methodological notes. The ABS also publishes *Consumer Price Index: Concepts, Sources and Methods*, a detailed methodological manual that explains the concepts, data sources and compilation techniques used for the index.^[1]

The RBA does not compile the CPI, but it relies on the series as a central input into monetary policy. The RBA explains that the CPI is suitable for inflation targeting because it captures price changes for goods and services households buy, is independently produced by the ABS, is publicly available and historically is not revised.^[3]

The CPI also interacts with other public institutions. The Australian Treasury uses inflation data in macroeconomic forecasting, fiscal analysis and budget documents. Regulators, market participants, unions, employers, businesses and courts may refer to CPI data in economic analysis or indexation clauses, although the suitability of CPI for a particular contract depends on the contract’s purpose and wording.

Publication frequency and recent development

Australia historically published its CPI on a quarterly basis. The ABS introduced a monthly CPI indicator in October 2022 and discontinued that indicator when it introduced the complete Monthly CPI from the October 2025 reference month.^[1] The complete monthly measure represented a significant change in Australian price statistics, because the main CPI publication moved from a quarterly to a monthly release cycle.

As of the August 2026 release, the ABS states that the CPI is released monthly, generally on the last Wednesday of the month following the reference month. The exception is the December-period publication, which is released in early January. In most cases, the monthly CPI is released about four weeks after the end of the reference month.^[2]

The ABS continues to publish selected quarterly CPI series. Quarterly tables are included in every monthly publication, while new quarterly data are available in the releases for March, June, September and December.^[2] The quarterly data are therefore still relevant for long time-series analysis, historical comparisons and some legacy uses, but the principal regular CPI publication is now monthly.

The CPI index reference period is September 2025 = 100.00 for both monthly and quarterly data. The quarterly data were re-referenced for the December 2025 quarter; before that, the reference period was 2011–12 = 100.0.^[2]

Coverage and geography

The CPI is designed conceptually to provide a general measure of price inflation for all Australian households. In practice, the ABS notes that the index is constrained to measuring changes in prices faced by private households living in the six state and two territory capital cities.^[2]

The national monthly CPI is published as a weighted average of the eight capital cities. Capital city indexes are based on the 2011 Australian Statistical Geography Standard Greater Capital City Statistical Areas. These indexes measure price movements over time in each city, not differences in price levels between cities.^[2] This distinction is important: a higher index for one city does not necessarily mean that the city is more expensive than another, only that prices in that city have changed by a particular amount relative to its own reference period.

The CPI population group is metropolitan households. The CPI does not directly represent every rural or remote household, nor does it represent the experience of a particular household type. Because households spend differently, the inflation experienced by a renter, a mortgage-free retiree, a family with children, or a student can diverge from the aggregate CPI.

Basket, groups and weights

The CPI basket consists of goods and services that account for a high proportion of expenditure by the CPI population group. The ABS arranges this basket into 11 major groups: food and non-alcoholic beverages; alcohol and tobacco; clothing and footwear; housing; furnishings, household equipment and services; health; transport; communication; recreation and culture; education; and insurance and financial services.^[2]

Beneath these groups are more detailed categories. The ABS methodology states that there are 87 expenditure classes, each with its own weight. These weights are measures of relative importance and are used to combine price changes across expenditure classes into aggregate indexes.^[2]

Weights do not represent the spending pattern of an “average household.” Instead, they reflect the relative amount spent on goods and services as a proportion of total expenditure by all in-scope households. The ABS notes that the weights represent expenditures of households as a whole, not any specific household type or size.^[2]

The ABS has generally updated CPI weights annually since 2018. In years when the Household Expenditure Survey is available, it is used to update weights; in most other years, Household Final Consumption Expenditure data from the National Accounts is used as the principal source.^[1] Annual re-weighting helps the CPI basket remain representative of contemporary household spending patterns.^[4]

For the 2025 CPI weight update, the ABS stated that the largest group weight was housing at 21.39 per cent, followed by food and non-alcoholic beverages at 17.44 per cent, recreation and culture at 12.74 per cent, and transport at 11.45 per cent.^[4] These weights illustrate why large price movements in housing, food or transport can have substantial effects on the overall CPI.

Price collection and data sources

The ABS collects prices from a range of retailers and other providers across the eight capital cities. Price collection methods include web scraping, online and telephone collection from retailers, and administrative data such as supermarket scanner data.^[2]

The frequency of collection varies by item. As of the August 2026 methodology, 87 per cent of the CPI by weight is collected monthly. Some prices are collected daily or weekly where data are available, such as supermarket scanner data for grocery items and automotive fuel. A few items are priced only once a year because that is when prices are typically reviewed, or because the items are seasonal.^[2]

The ABS states that almost 900,000 separate price quotations are collected each month. Prices may come from sources such as supermarkets, restaurants, airlines and schools, as well as administrative and transactions datasets.^[2]

Quality adjustment is a core part of CPI compilation. If the specifications of an item change, the ABS seeks to adjust observed prices so that the index reflects pure price change rather than changes in quality. This is important in categories such as electronics, vehicles and household goods, where products change frequently.^[2]

Calculation and interpretation

The CPI is a fixed-basket price index. A simple way to interpret it is to imagine a basket of goods and services purchased each month; as item prices change, the total price of that basket changes. The CPI measures the change in the price of that basket over time.^[2]

CPI changes can be expressed in index points or percentages. For example, the ABS methodology illustrates a calculation in which an index rises from 97.58 in January 2025 to 101.33 in January 2026. The change is 3.75 index points, which is a 3.84 per cent increase when divided by the earlier index value.^[2]

Published index numbers, except for underlying trend series, are rounded to two decimal places. Percentage movements are calculated from rounded index numbers and then rounded to one decimal place. As a result, small rounding differences can arise when users compare aggregates and components.^[2]

Original CPI indexes are revised only in exceptional circumstances, such as to correct a significant error. Seasonally adjusted series, including trimmed mean and weighted median inflation, can be revised as additional observations are incorporated into the seasonal adjustment process.^[2]

Analytical measures

The headline CPI is the original, all-groups measure. However, analysts frequently use additional CPI measures to distinguish broad inflation trends from temporary or volatile price movements.

The trimmed mean and weighted median are measures of underlying inflation. The ABS methodology states that both are derived using seasonal adjustment techniques. Expenditure classes are ranked from lowest to highest according to their seasonally adjusted percentage change from the previous month. The trimmed mean is calculated from the middle 70 per cent of the distribution, while the weighted median is the price change at the 50th percentile of the distribution.^[2]

The ABS also publishes tradables and non-tradables components. Tradables comprise items whose prices are largely determined in world markets, while non-tradables comprise items whose prices are largely determined by domestic factors.^[2] This distinction is useful in analysing how exchange rates, import prices, domestic labour costs and local capacity pressures influence inflation.

Other analytical series include goods inflation, services inflation, CPI excluding volatile items, market goods and services excluding volatile items, CPI excluding food and energy, and measures excluding insurance and financial services or housing. These series do not replace headline CPI but can help users understand the composition and persistence of inflation.^[2]

Role in monetary policy

The CPI is the price index used in Australia’s inflation-targeting framework. The RBA’s target is annual consumer price inflation of 2 to 3 per cent over time, measured by the percentage change in the CPI.^[3]

The RBA uses monetary policy to influence demand, inflation expectations and financing conditions. When inflation is expected to remain above target for a prolonged period, the RBA may tighten monetary policy, including by raising the cash rate. When inflation is expected to remain below target, it may loosen policy, including by lowering the cash rate.^[3]

Because monetary policy affects the economy with lags, policymakers examine not only current CPI readings but also forecasts, underlying inflation measures, labour-market data, wage growth, productivity, global prices and financial conditions. CPI data are therefore a central input but not the only input into RBA decisions.

Current data example

In the August 2026 CPI release, the ABS reported that the CPI rose 4.0 per cent over the 12 months to August 2026, up from 3.5 per cent over the 12 months to July 2026. The ABS also reported that trimmed mean inflation was 3.6 per cent over the year to August 2026, unchanged from July, and that the CPI rose 0.4 per cent in original terms in August and 0.7 per cent in seasonally adjusted terms.^[5]

This example shows the difference between headline inflation and an underlying measure. Headline CPI includes all items in the basket and can be affected by large movements in volatile or policy-sensitive categories. Trimmed mean inflation removes the most extreme price movements in each period and is often used to assess broader inflation momentum.^[2]

Uses outside monetary policy

CPI data are used widely in finance, public policy and private contracts. Governments use inflation data in budget analysis, tax and welfare policy, and economic forecasting. Businesses use CPI data for pricing decisions, cost escalation clauses, revenue planning and wage negotiations. Financial-market participants monitor CPI releases because inflation surprises can affect interest-rate expectations, bond yields, the Australian dollar and equity-market valuations.

CPI is also used in indexation, although the ABS generally cautions users to consider whether CPI is appropriate for their specific purpose. Some contracts refer to all-groups CPI, while others may refer to a city index, a specific component, or a different price index. Because the CPI measures consumer prices and not producer costs, wages, asset prices or living costs for a specific household type, it may not be suitable for every escalation formula.

Limitations

The CPI is an aggregate statistical measure and has several limitations. It does not measure the inflation experience of every individual household. Households differ in housing tenure, transport use, family structure, health needs, education spending and location. These differences can make a household’s personal inflation rate higher or lower than the published all-groups CPI.

The CPI also excludes or treats differently some items that matter to household finances. For example, it is designed around consumption goods and services, not asset prices. Changes in established dwelling prices are not the same as consumer price inflation, although housing-related consumer expenditures such as rents and new dwelling purchases by owner-occupiers are included in the CPI basket.

Another limitation is substitution. A fixed basket does not fully capture how households may change their spending when relative prices move. The RBA notes that if households buy less of items whose prices rise relatively quickly and more of items that become cheaper, the cost of what they actually consume may rise by less than the cost of a fixed basket.^[3]

Despite these limitations, the CPI remains Australia’s most widely used and institutionally important measure of household inflation. Its strengths include independent compilation by the ABS, transparent methodology, broad coverage of household consumption, regular publication and long historical continuity.