RBA Weighted Median CPI QoQ

What is RBA Weighted Median CPI QoQ?

The RBA Weighted Median CPI QoQ is an analytical series for underlying inflation inside Australia's Consumer Price Index. It shows the medium-term trajectory of inflation for targeting and health checks. It aids the Reserve Bank of Australia, researchers and economists, smoothing cyclones, policy changes and oil shocks.

The series runs from the June quarter of 2002, developed by the Reserve Bank of Australia. The Australian Bureau of Statistics has published it since 2007 for private households in the 8 capital cities. Coverage is about two thirds of households, with the national figure a weighted average of 11 groups, 33 sub-groups and 87 expenditure classes.

It is not headline All groups inflation and not a living cost gauge for one household, rural areas or business. It is not a fixed exclusion of food and energy because excluded classes change each quarter. Since 1993 the Reserve Bank has targeted 2 to 3 percent on average over the business cycle.

When is it released and what happens each release?

Prices are collected through the reference quarter, and 87 percent of weight is collected monthly. Some items use daily or weekly pricing, while education, health insurance and stamp duty use annual, bi-annual or quarterly pricing. Release is at 11:30am Canberra time on the last Wednesday after the quarter, subject to public holidays.

Quarterly data sit in Tables 17 and 18 of the Monthly Consumer Price Index for March, June, September and December. Each release shows the analytical table with seasonally adjusted All groups, Trimmed mean and Weighted median in quarterly and year-ended terms. It also shows group detail with points contributions, Goods and Services splits and Tradables and Non-tradables splits.

Original indexes change only after a serious error, while seasonal factors are re-estimated each period. A higher quarterly median means broader median pressure.

What moves RBA Weighted Median CPI QoQ?

No class is always in or out because the median class changes each quarter. Goods are 60 of 87 classes at about 53 percent of weight, and Services are 27 classes at about 47 percent. Tradables are 49 classes at about 35 percent and Non-tradables are 38 at about 65 percent.

Fruit, Vegetables and Automotive fuel are tracked apart from the median.

• Housing: rents, new owner homes, repairs, rates and utilities including electricity, gas and water.
• Food and non-alcoholic beverages: groceries, fresh produce and eating out inputs.
• Transport: motor vehicles, parts, fuel, servicing, fares and motoring charges.
• Recreation and culture: holiday travel and accommodation, computing, books, sport and pets.
• Furnishings, household equipment and services: furniture, appliances and household supplies and services.
• Remaining groups: alcohol and tobacco, clothing and footwear, health, communication, education and insurance and financial services.

In the June quarter of 2023, released July 26, 2023, headline was 0.8 percent on the quarter and 6.0 percent over the year. Trimmed mean rose 0.9 percent and 5.9 percent over the year. Weighted median rose 1.0 percent and 5.5 percent over the year, hotter quarterly but cooler yearly.

Annual headline had fallen twice from the 7.8 percent peak of December 2022.

How is RBA Weighted Median CPI QoQ calculated?

1. Starting point: Take the seasonally adjusted quarterly percent change of each of the 87 expenditure classes.
2. Weighting: Compute each weight from its prior quarter share of the total index.
3. Ranking: Sort classes smallest to largest and cumulate weights to 100 percent.
4. Median pick: The median is the change of the first class reaching 50 percent of cumulative weight. For example, five classes move by minus 1.0, plus 0.2, plus 0.5, plus 0.8 and plus 2.0 percent. Weights 10, 30, 25, 20 and 15 cumulate to 10, 40, 65, 85 and 100 percent. The median is 0.5 percent.
5. Publication: Publish the movement rounded to one decimal place. Final changes use rounded indexes, so copies from rounded data can differ slightly.

Key point: The median never permanently excludes food, energy or any fixed list. Every quarter all 87 classes are ranked and the middle class sets the reading. The trimmed mean instead averages the middle 70 percent after removing 15 percent from each tail.