Behind the Numbers: How Australia Measures Inflation

Behind the Numbers: How Australia Measures Inflation

What exactly is inflation, and how do we measure it? In this episode, we dive into the Consumer Price Index (CPI)—Australia’s main tool for tracking inflation. We explain how the Australian Bureau of Statistics (ABS) builds the CPI using a basket of goods and services, how item weights reflect household spending, and how prices are collected. You'll also learn about underlying inflation measures like the trimmed mean and weighted median, which help filter out short-term volatility. Plus, we unpack the limitations of the CPI, including issues like substitution bias and its shortcomings as a true measure of the cost of living. A must-listen for anyone curious about how inflation is really tracked.

Source: https://www.rba.gov.au/education/resources/explainers/

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