The Australian Bureau of Statistics (ABS) is pressuring the Federal Government for a $4 million funding lift so that it can provide the Reserve Bank with up-to-date inflation figures.

Key points: Both RBA and ABS want to move from quarterly to monthly CPI

Both RBA and ABS want to move from quarterly to monthly CPI CPI assesses cost of living and is directly correlated to interest rates

CPI assesses cost of living and is directly correlated to interest rates The move would have cost $15 million in 2010, but only $4 million now

The move would have cost $15 million in 2010, but only $4 million now ABS says it cannot absorb costs with current Federal Government funding

The RBA has been agitating for a move to monthly CPI readings for more than eight years.

Just last October, in a speech titled Uncertainty, deputy governor Guy Debelle again bemoaned the lack of timely inflation data in Australia.

"At the moment we need to wait three more months to gain a better understanding as to whether any particular read on inflation is signalling a possible change in trend or is just noise," Mr Debelle said.

"That is one of the reasons why the RBA has long advocated a shift to a monthly calculation of the CPI."

The ABS on Wednesday released a discussion paper stating its case.

ABS chief economist Bruce Hockman said the data could be collected and published with the same rigour and reliability with which the ABS currently produces its quarterly CPI.

He said it was no longer good enough to make the Reserve Bank wait for such critical information when every other central bank in the G20 has access to its own comprehensive inflation data monthly.

"I think it's important. Currently if there is an unusual number we produce they [RBA] need to wait for another three months to see whether that's confirmed by subsequent observations or turns out to be a rogue number, and there's a demand for it not just from the RBA but from the markets too," he told the ABC.

Australia an outlier

The International Monetary Fund (IMF) publishes guidelines for the collection and publication of data for countries that hope to access international capital markets.

Among its Special Data Dissemination Standards (SDDS) is a recommendation that the consumer price index (CPI) be produced monthly.

Australia is one of just two countries in the OECD and the only member of the G20 that has long ignored that IMF edict.

Both Australia and New Zealand publish CPI quarterly.

What price reliable data?

The quarterly CPI numbers currently take in to account 87 expenditure classes made up of 1 million prices. Ten years ago the number of prices being assessed was about 50,000.

In the 1990s, most data collection had to be done over the phone or in person in stores. Luckily, thanks to technological advances, the effort required to calculate 1 million prices is significantly less than it once was to tally 50,000.

As part of the 2010 review of the CPI, the ABS estimated it would cost an additional $15 million every year to produce a monthly CPI.

ABS chief economist Bruce Hockman now says improved systems and new technology mean it would cost a fraction of that at about $4 million a year.

Without that kind of contribution from the Federal Government, he is adamant the ABS will not be able to move to monthly reporting despite international calls that it does so.

Mr Hockman dismisses any suggestion that monthly CPI could be produced within the current Federal Government ABS appropriation.

"We'd need to cut back on something else and we know from recent history that that's not a popular option because you end up robbing Peter to pay Paul," he said.

He is hoping the arguments in favour of a more regular CPI reading will be so persuasive that the ABS will not have to fight treasury, like other government agencies have had to, for more money.

Purpose of the CPI

The principal purpose of the CPI is to assess the cost of living but, critically, from a macroeconomic perspective, the direction of official interest rates is directly correlated with the rate of CPI.

Figure 2: Inflation and the Cash Rate (%), 2004-2017 ( Supplied: ABS )

In 1993, the Reserve Bank adopted inflation targeting as a goal of monetary policy.

It is one of the only areas of federal policy that has enjoyed bipartisan support for 25 years.

In theory, keeping the CPI within a band of 2-3 per cent creates a stable currency, works towards full employment and ensures the economic prosperity and welfare of the Australian people.

In practice, with the inflation rate stubbornly below 2 per cent since 2014, interest rates have been set markedly low (1.5 per cent) by Australian standards with the RBA signalling the next movement will be up, not down.

This comes despite an unemployment rate that is still relatively high.

Ironically, after a decade of exploratory work on monthly CPI reporting, its utility is now in question as economists, led by former RBA board member Warwick McKibbin, call for inflation targeting to be abandoned in favour of some other gauge of economic activity that better reflects 21st century considerations like climate change and digital disruption.

After 112 years without a chief economist, the ABS last year appointed Bruce Hockman to the role.

As the man himself explains: "The world has become much more complex.

"There's a need to produce data that's internally coherent and integrated not just across economic data, but social data as well.

"We need to explain what we're doing and why we're doing it and in all that make sure that we're representing one economy and telling one story."