ABS explains CPI leap

THE ECONOMY:

The Australian Bureau of Statistics has apologised and admitted it got it wrong when calculating the nation’s latest inflation rate.

This week the ABC announced the national CPI had risen by 13,750% over the past 12 months to the current quarter compared with the 1.7% reported for the previous corresponding period.

Director of the ABS’s CPI division, Marge Inoferror, said she had pinpointed where the calculations for the latest inflation figure had gone wrong.

“The ABS usually sources data on prices for a so-called ‘basket’ of goods from selected businesses across the country,” Ms Inoferror said.

“We use a spread of business types and the prices they charge to ensure the accuracy of the final figure as best we can.

“But for the latest quarterly figures we erroneously used only one type of business — cinema candy bars (main picture).

“We believe this has led to the latest 13,750% CPI figure for the previous 12 months.”

The announcement of the incorrect CPI figure was greeted with criticism from the business sector.

“We don’t think inflation is as high as 13,750%. In fact we’re pretty sure it’s not,” said National Employers’ Association president Lois Wages.

“Getting the inflation figure correct is absolutely vital for employer peak groups like ours and all the employers we represent throughout Australia.

“We have to be able to rely on a correct CPI figure from the ABS so that we can use it to argue vigorously against raising wages by that or any other amount.

“Even if the CPI is a minuscule fraction of just one percentage point, we can’t ever condone a matching wage rise because it will always destroy jobs and our national economy regardless of the size of the profits being made by individual employers,” Ms Wages said.