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INSIGHTS

What is CPI?

CPI is an acronym which can stand for many things. A quick dictionary search shows for those in the motoring industry it can mean Crash Position Indicator. I gather this is some kind of emergency beacon. For us in the commercial property industry though, it means Consumer Price Index. I thought today we could have a look at what that is, and what it means for your Lease Bureau prepared lease.

The Consumer Price Index is a statistic published by the Australian Bureau of Statistics (ABS) which measures household inflation. It is published quarterly. Certain contributors are used in measuring the CPI. They include the prices of food, clothing, and residential rent. Though the wonders of maths, they are somehow calculated to create the CPI. But let us leave that to the statisticians.

All that should matter to you is that the ABS also publishes a CPI based on Adelaide alone.  In the June quarter 2021, the CPI increased by 2.8% annually.

If your lease has CPI reviews, the Adelaide CPI is important to you. This is the rate which your reviews will be based on. It is vital then that you know what the rate is when these reviews occur.

Like the ABS, we also publish the Adelaide CPI on our website if you need to check the current rate. In fact, The Lease Bureau has a record of the rate since 1982. Perhaps we do this because, like the ABS, we are also a “Bureau”. We like to think it has something to do with the fact that we are always here to assist our clients. Either way, the CPI is something worth knowing when you look at your lease next.

Regards

Steve Evans

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