Current prices – ‘value’ or ‘nominal’
Current prices are measured by a combination of quantity and unit prices. Each household consumption category is likely to have multiple sub-categories with different quantities and unit prices that vary over time.1
For example, consider the consumption category food, of which rice and pasta are two different sub‑categories. The current value of ‘rice’ in period t is measured by the quantity multiplied by the unit price in period t. Pasta is measured in the same process but may have a different quantity and price. The general formula used to value current prices is:
Where:
CPt is the current price value at time t
qt is the quantity at time t
pt is the unit price at time t
The current price value of ‘food’ can be measured as follows:
The valuation of ‘current prices’ involves considering both quantity (volumes) and unit prices (prices), making it a metric for assessing the overall household consumption within each category.
Chain-volume – ‘volumes’ or ‘real’
Chain-volume measures provide an alternative measurement for quantifying volumes compared to constant price estimates. Unlike constant price estimates, which evaluate changes in quantity relative to a fixed base period updated every five years, chain-volume measures are updated annually using prices from a designated base period. These annual reweighting volume change measures are then systematically linked together to construct a time series of chain volume measures.
Chain-volume measures isolates the effect of quantity (or ‘volumes’) and therefore can be used to analyse volumes.
Prices
The price series is obtained by subtracting ‘values’ (or current prices) from ‘volumes’ (or chain‑volumes). It's important to note that series in levels cannot be directly subtracted to determine prices. However, utilising percentage series, such as average annual change, allows for an approximation of prices.
Footnotes
[19] ABS, Demystifying Chain Volume Measures.
Updated