SYDNEY (Reuters)

Australia's official statistician has acknowledged it has been overestimating child care costs in its consumer price index (CPI) for the past year, but this mistake will not impact overall CPI inflation.

Underlying inflation indicators, like the trimmed mean and weighted median, used by the Reserve Bank of Australia, remain unaffected as stated by the Australian Bureau of Statistics (ABS).

In a media release, the ABS disclosed an error in estimating the impact of government subsidies for child care, effective from July 2023.

Consequently, the published child care index in the September quarter was inflated by 5.8%, or 9.5 index points, resulting in a figure of 163.0. The annual growth rate for care costs should have been reported at 10.7%, instead of 12.1%.

Given that child care comprises only 0.9% of the CPI basket, this error led to an overall CPI increase of only 0.04% for the quarter.

The ABS plans to rectify the series in the upcoming October monthly CPI report, scheduled for release on November 27. However, this correction will not affect the quarterly inflation rate already published.

The ABS noted the CPI is frequently used for indexation purposes, hence revisions may generate uncertainty and confusion.