The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

The Pensioner and Beneficiary Living Cost Index (PBLCI) is used to adjust the maximum basic rate (MBR) of pension where movement in the PBLCI is greater than movement in the consumer price index  (CPI) for the relevant indexation period. The PBLCI specifically measures changes in the cost of living experienced by pensioner and beneficiary households to ensure that pension rates keep up with the changes in their cost of living. Movements in the CPI will be compared to movements in the PBLCI and the pension MBR will be indexed in line with the higher of these two indexes before benchmarking to male total average weekly earnings (MTAWE).

The base quarter is the older of the two quarters of CPI or PBLCI data used in indexing a payment rate or limit or threshold. The reference quater  of the CPI or PBLCI figure is compared to the base quarter CPI or PBLCI figure to determine the indexation factor to be applied. The base quarter is defined in the legislation and varies according to the amount being indexed.