To ensure you are referring to the right CPI figure, make sure you download the CPI table as per the steps above. The graph displayed on the ABS website's CPI page is a national average, which is not the correct figure to refer to.
If your rent is due to increase based on the consumer price index, here’s your guide to how it works and the calculations which could be used to work out your rent.
The consumer price index (CPI) is a measure of how much the average costs of a fixed basket of goods changes over time. It is calculated quarterly and published by the Australian Bureau of Statistics (ABS) as a measure of inflation.
As inflation goes up, your commercial leasing costs are likely to rise too. Here’s your guide to the CPI calculations which could be used for your commercial lease.
Start with your lease documents
First, check your commercial lease to confirm when and how your rent will be reviewed.
If your lease shows that a CPI rent review is due, check the definition of CPI that is used. The precise wording might seem like a trivial detail, but it could have an impact on how any cost increases are calculated.
Your lease might say "Consumer Price Index (All Groups – Perth)" for the year ending the quarter immediately before your CPI rent review date, or something similar.
Locate the relevant data
Once you know which definition of CPI applies to your rent, visit the ABS website for the latest information. Here's how to find the right CPI figure:
- Visit the CPI page on the ABS website
- Click on the Data download button at the top of the page
- Download TABLES 1and 2. CPI: All Groups, Index Numbers and Percentage Changes
- When the file has downloaded, select tab Data1
- Find the relevant CPI percentage. Column 0 has the CPI Perth All Groups - Percentage Change from Corresponding Quarter of Previous Year.
Once you have the right figure (which matches how your lease defines CPI), you can apply this to your rent.
Check your rent calculation
To calculate changes to your rent, divide the CPI percentage by 100 to get a decimal figure. Then, multiply this number by your current rent. Finally, add this number to your current rent.
(Current rent x CPI percentage ÷ 100) + current rent = new rent
Here's an example. We'll assume your rent is currently $10,000 and the CPI figure which applies is 5.8.
Current rent =$10,000
$10,000 x 5.8 ÷ 100 + $10,000 =$10,580
A shortcut form of this calculation is to multiply your current rent by CPI% plus one.
Current rent x 1+CPI%
$10,000 x 1.058=$10,580
Make sure your rent has been calculated correctly
If you run this calculation based on the wording in your lease, you should get the same figure your landlord has calculated for your new rent amount.
Read Has your rent increase been calculated fairly? for more details on rent reviews and what you can do.
Contact the SBDC for the support you need
If you are unsure about the terms of your lease, or how to calculate your CPI rent review, did you know you can get free advice from the SBDC’s commercial tenancy specialists? We can help with this and other guidance on your commercial lease. Call 133 140 or complete the form on our business advisory page to request a call from an adviser.
You can also:
- Explore the business premises section of our website for more information on leasing commercial premises.
- Learn what to do if you are struggling to pay rent for your business.
- If you need to increase your prices to cover increased costs of doing business, learn how to tell your customers about your price rise.