ABS and RBA Joint Conference – 2023 Underneath the Headlines: Understanding Price Change in the Australian Economy

The pandemic, international conflict, and natural disasters have led to disruptions in demand, supply and labour markets resulting in price changes not seen in the Australian economy for several decades. As Governor Lowe has put it, Australia has experienced ‘a very large inflation surprise’ (speech to the Anika Foundation, Sydney 8 September 2022). Understanding the dynamics of these price changes requires analysis below the macro – ideally the interaction of individual economic actors at the regional and sectoral levels.

The effects of these disruptions have been experienced in different ways across sectors, influenced by levels of competition, types of businesses and regional differences, and this has led to different outcomes in the speed and size of prices increases that have been passed along the supply chain.

The impact on types of households has also differed and resulted in changes in the observed patterns of household spending. The ABS is exploring the use of rewards card data to inform detailed expenditure by households and is designing a new Living Cost in Australia Survey to collect income, housing, and wealth data.

While wages growth is picking up from the lows of recent years, the current tight labour market has not yet generated real wage growth for many workers. Analysis of microdata can provide insight into contemporary remuneration practices (for example, the use of non-wage remuneration) and the price-setting behaviour of businesses.

The pandemic also placed significant stress on the provision of services in the non-market sector – health, disability and aged care, and education – resulting in increased costs and higher prices borne by government or consumers. This has highlighted the challenges in understanding the productivity performance of these sectors, their cost/funding models, and the interaction with the market economy (particularly in the competition for labour).

Research utilising detailed timely microdata is providing fresh insights into how these disruptions are being experienced across types of businesses and households.

The conference will explore how this data, and associated new measurement approaches, can inform contemporary research and policy questions into the dynamics of price change in the Australian economy.

Papers

Session 1: The pandemic, natural disasters, and geopolitical events have led to supply shocks which have had significant impacts on prices. The intersection of these supply chain impacts and the level of competition in sectors of the economy has contributed to the price shocks flowing through the economy. How can the use of business microdata sets assist in understanding these mechanisms?

• The Role and Benefits of Deep Data in Delivering the ACCC’s Mission: To Promote Competition and Make Markets Work in the Interests of Consumers, Businesses and the Economy
  Presenter: Gina Cass-Gottlieb, Australian Competition and Consumer Commission
  Download 898KB
• What Can We Learn about Industries' Vulnerability to Overseas Price Shocks from Merchandise Trade Data in BLADE?
  Presenter: Michael Brennan, Productivity Commission
  Download 2.1MB

Session 2: The unemployment rate is as low as it has been for decades and there are wide-spread reports of labour and skills shortages; meanwhile the most used measures of wage inflation remain stubbornly low. Can detailed data and associated analysis of the labour market and relationships between employers and employees help explain this phenomenon?

• Why Is Wage Growth so Low When the Rate of Unemployment is 3.5%?
  Presenter: Jeff Borland, University of Melbourne
  Download 588KB
• Using New Data Sources to Understand and Monitor Changes in Prices, Wages and Incomes
  Presenter: Jonathan Hambur, Reserve Bank of Australia
  Download 600KB
• The Ghosts of Employers Past: How Prevalent Are Non-compete Clauses in Australia?
  Presenter: Dan Andrews, e61 Institute
  Download 518KB

Session 3: As price inflation outstrips wage growth all eyes turn to the reaction from consumers and the impact of this decline in real incomes on the welfare of different population groups. What can we learn about the consumer response and the impact on living standards from the ever-increasing volume of consumer behaviour data from private sector sources?

• How Do Consumers React to the Price of Food? Evidence from Supermarket Micro Data
  Presenters: Robert Ewing, Australian Bureau of Statistics and Leigh Merrington, Australian Bureau of Statistics
  Download 431KB
• New Insights into the Rental Market
  Presenters: Michelle Marquardt, Australian Bureau of Statistics and Fred Hanmer, Reserve Bank of Australia
  Download 671KB
• The Effects of Changes in Unemployment Benefits on Consumer Spending: Evidence from the Australian JobSeeker Supplement (paper not available)
  Presenters: Gianni La Cava, e61 Institute and Nicole Adams, e61 Institute
• Multilateral Index Number Methods for Consumer Price Statistics
  Presenter: Professor Kevin Fox, Centre for Applied Economic Research
  Download 1.4MB

• Biographies of Presenters
  Download 175KB