Although these constant price estimates were expressed in dollar terms they only change with changes in the underlying quantities because the prices have been held constant. The major criticism of the constant price estimation process is that the estimates usually become less accurate the further the current period is from the base year. There are various methods that can be used to derive constant price estimates, each producing different results depending on the extent to which relative prices change. If all prices increase at the same rate then the methods of producing constant price estimates will produce the same results. However, in reality, this is not the case.
Some prices increase faster than others and some prices fall while others rise.
The more variation in relative price changes the greater the difference between constant price estimates that can be produced and the further these estimates are from a 'true' real value. This is known as the substitution effect. The major question, then, is how often should a constant price series be rebased to minimise this substitution effect. Published constant price estimates have usually been rebased about every five years. Chain Volume Measures SNA93 recommends that this rebasing should be done annually and the ABS will now follow some of the world's leading statistical agencies by adopting this recommendation.