Question

the qs in the first 3 pictures and why is employee household cost of living index lower than all other groups in the last picture?

The CPI - underlying rates • From the September quarter 2011, the ABS introduced another “Analytical Series” namely a seasonally adjusted measure of the CPI. . Would you expect the level and change in the level of prices to be influenced systematically by the time of year? • At the introduction of the 16th series, 62 out of the 87 expenditure classes were classified as seasonal.

Answer 1

Seasonally adjusted prices have high degree of influence as it collated data from broader smaple size and customer preferences over longer horizon to factor out seasonal changes of prices and thus give much accurate data and realistic version of CPI.

When overall CPi is lower the effect is marginalised due to wide variety of goods and services which aggregates to COe CPi headroom inflation. However when seperate inflation as weightage to market goods and services excluding volatile items is higher quarter on quarter itvsuggests that volatile items viz. Food and energy are excluded and thus they remain negative while other items remain in positive inflation giving conclusions that core CPI is negative due to inflation decline in food and energy prices however excluding these both market good and services show growth in inflation.

Chnage in interest rates have transmission lags as banks take time to pass it onto customer and hence households cost of living shows delays in adjustment of actual housing loan rates determining its affordability becomes cumbersome for which it gets neglected.

Employee household cost of living index is lower largely die to rent based accommodation or company accommodation which drastically lowers down due to rent sharing model and thus the larger amount gets discounted. Secondly it does take weighted average of 8 cities and the determination of weights assigned to each city might be extrapolated which may give deviated results.