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Trimmed Means CPI

Price inflation for June quater was released today and the CPI is up 1.2% for the quarter and 2.1% on 1 year ago. But the answer to what's Australia's inflation rate is now a multiple choice question. It's either:

[A] 2.1% on the traditional CPI weighted average for All Groups and 8 Capital Cities

[B] 1.8% for All Groups excluding Housing and Financial & Insurance Services (like overseas countries measures)

[C] 2.6% for All Groups excluding volatile items

[D] 2.8% for the 'Weghted Mean', an RBA smoothed formula

[E] 2.7% for the 'Trimmed Mean', another RBA smoothed formula

The two RBA series are being published for the first time by ABS and released at the same time as the traditional CPI publication. (see http://www.abs.gov.au/ausstats/abs%40.nsf/mf/6401.0 ) As for FinDem, we will keep adding the traditional All Groups, 8 Capitals average to our Family Budget series for price inflation which starts from December 1901. Average to date is 3.9%pa over 105.5 years.

Posted Wednesday, 25 July 2007

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