guide to consumer price indez

8/13/2019 Guide to Consumer Price Indez

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Your Guide to the

Consumer Price Index

Catalogue no. 62-557-XPB

(Texte franais au verso)


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Data in many forms

Statistics Canada disseminates data in a variety of forms. In addition to publications, both standard and specialtabulations are offered. Data are available on the Internet, compact disc, diskette, computer printouts, microfiche andmicrofilm, and magnetic tape. Maps and other geographic reference materials are available for some types of data.Direct online access to aggregated information is possible through CANSIM, Statistics Canadas machine-readabledatabase and retrieval system.

How to obtain more information

Inquiries about this publication and related statistics or services should be directed to: Client Services Unit,Prices Division, Statistics Canada, Ottawa, Ontario, K1A 0T6 (telephone: (613) 951-9606, fax: (613) 951-2848),Internet: [email protected] or to the Statistics Canada Regional Reference Centre in:

Halifax (902) 426-5331 Regina (306) 780-5405Montral (514) 283-5725 Edmonton (403) 495-3027Ottawa (613) 951-8116 Calgary (403) 292-6717Toronto (416) 973-6586 Vancouver (604) 666-3691Winnipeg (204) 983-4020

You can also visit our World Wide Web site: http://www.statcan.ca

Toll-free access is provided for all users who reside outside the local dialling area of any of the Regional ReferenceCentres.

National enquiries line 1 800 263-1136National telecommunications device for the hearing impaired 1 800 363-7629Order-only line (Canada and United States) 1 800 267-6677

How to order publications

Statistics Canada publications may be purchased from local authorized agents and other community bookstores, theStatistics Canada Regional Reference Centres, or from:

Statistics CanadaO i d I i Di i i


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Statistics CanadaPrices Division

Your Guide to the

Consumer Price Index

Published by authority of the Minister responsible for Statistics Canada

Minister of Industry, 1996

Reproduction of this document is permitted for educational purposes subject to the requirementthat Statistics Canada is acknowledged as the source on all copies as follows: "StatisticsCanada, Your Guide to the Consumer Price Index , Catalogue No. 62-557-XPB, 1996", and thepage references. All other rights are reserved. Written permission must be obtained for anyother uses from Licence Services, Marketing Division, Statistics Canada, Ottawa, Ontario,Canada K1A 0T6.

December 1996

Catalogue no. 62-557-XPBFrequency: Occasional

ISBN 0 660 59250 9


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Your Guide to the CPI

This publication was written for the general public interested in obtaining a br ief non-technical introduction tothe Consumer Price Index (CPI). It poses and answers some of the more frequently asked questionsrelating to the construction, interpretation and use of this index.

This publication, prepared by Gail Logan and Heather Pearl , relates to the 1992 basket and the 1986 timebase. The work was carried out under the direction of:

Louis Marc Ducharme , Director, Prices Division

Margaret Parlor, Chief, Consumer Prices Section

Joanne Moreau , Head, Client Services Unit

Previous versions of this document, relating to earlier baskets and time bases, were prepared by HaroldHarnarine , Senior Economist, Prices Division.

Canadian Cataloguing in Publication Data

Main entry under title:

Your Guide to the Consumer Pr ice Index.

Text in English and French with French text on inverted pages.Added t.p. title: Votre guide d'utilisation de l'indice des prix la consommation.ISBN 0-660-59250-9


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Table of Contents

Page

What is the CPI? 1Misconceptions About the CPI 2How the CPI Relates to You 3The Goods and Services Contained in the CPI Basket 4The Relative Importance of Commodities in the CPI Basket 5Updating the CPI Basket 5

Collecting Prices 5Dealing with Quality Change 7Calculating Indexes 7The CPI Time Base 8Calculating Percentage Changes 9

Using the CPI to Adjust Payments 10Using the CPI to Compare Dollar Values Over Time 10CPI and Other Related Publications 12


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TABLE - 1

The Consumer Price Index and Major Components,(Not Seasonally Adjusted), Canada, 1986=100

Indexes Percentage change May 1996 from

May April May April May1996 1996 1995 1996 1995

All-items 135.7 135.3 133.7 0.3 1.5

Food 127.8 128.3 126.8 -0.4 0.8Shelter 134.2 134.1 133.9 0.1 0.2Household operations and furnishings 124.0 123.9 121.6 0.1 2.0Clothing and footwear 131.5 132.0 131.7 -0.4 -0.2Transportation 144.9 143.1 138.8 1.3 4.4Health and personal care 136.7 136.7 135.9 0.0 0.6Recreation, education and reading 145.7 144.0 142.5 1.2 2.2Alcoholic beverages and tobacco products 146.3 145.5 143.6 0.5 1.9

Goods 129.4 128.9 127.4 0.4 1.6Services 143.6 143.2 141.4 0.3 1.6

All-items excluding food and energy 137.8 137.6 135.8 0.1 1.5

Energy 135.0 130.8 130.2 3.2 3.7

P h i f h


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What is the CPI?

T he Consumer Price Index (CPI) is a measureof the rate of price change for goods andservices bought by Canadian consumers. It is themost widely used indicator of price changes inCanada.

The Canadian CPI began with a study conductedby the Department of Labour in the early 1900s.The study was based on a hypothetical familybudget that represented weekly expenditures of anurban working class family of five. Retail prices of29 food items and five fuel and lighting items werecollected in approximately 60 cities. In addition,information was obtained on the rent for arepresentative workers dwelling. Since then, theCPI has grown in comprehensiveness and detail tokeep pace with increases in its use. Today, the CPIdirectly or indirectly affects nearly all Canadians.Consider the following:

Old Age Security pensions, CanadaPension Plan payments, and other formsof social and welfare payments areadjusted periodically to take account ofchanges in the CPI.

Rental agreements, spousal and childsupport payments and other forms ofcontractual and price-setting arrange-

Think of the CPI as a measure of the percentagechange over time in the average cost of a largebasket of goods and services purchased byCanadians. The quantity and quality of the goodsand services in the basket remain the same.Therefore, changes in the cost of the basket overtime are not due to changes in the quantity and/orquality of the goods and services observed.

The CPI is defined, more precisely, asan indicator of the changes in consumerprices experienced by Canadians. It isobtained by comparing, through time, thecost of a fixed basket of commoditiespurchased by Canadian consumers in aparticular year. Since the basket contains

commodities of unchanging or equivalentquantity and quality, the index reflects onlypure price movements .

The Consumer Price Index for a given month isusually published in the third week of the followingmonth, and it is not revised once it has beenpublished. This makes it suitable for users whomust have timely and final data.

If you are concerned with everything in the CPIbasket, you would use the All-items index. If you


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Seasonally adjusted data for selected series providean additional source of useful information for certainanalytical purposes. To meet this specialized need,Statistics Canada calculates a limited number ofmonthly consumer price indexes from whichseasonal influences are removed to provide a betterindication of trends in price changes. These seriesare subject to revision. Seasonally adjusted seriesare not recommended for use in indexation.

Misconceptions About the CPI

T he Consumer Price Index is often perceivedas the only measure of the rate of price change.This is a common misconception. The CPI is oneof many price change measures available to thepublic. It reflects the experience of Canadian con-sumers buying consumer goods and services.Statistics Canada publishes a number of measuresof price change for different target groups, fordifferent products, and using different methodolo-gies. Take the evolution of gasoline prices as anexample. Depending on the circumstances, it mightbe more useful to examine the price of gasoline atthe gas pump (from the CPI), the price of gasolineas it leaves the refinery (from the Industrial ProductPrice Index), or world crude oil prices (from theRaw Materials Price Index).

h d l d d

the New Housing Price Indexesmeasure changes over time in the con-tractors selling prices of new residentialhouses.

the Machinery and Equipment PriceIndexes

measure price changes for investment inmachinery and equipment by industry ofpurchase. Price indexes are calculatedfor industries, major groups of industries,the total for all industries, as well as forcommodities.

the Non-residential Building ConstructionPrice Indexes

measure contractors selling price changesof new non-residential construction (i.e.,commercial, industrial and institutional).The indexes relate to both general andtrade contractors work and exclude thecost of land, design and real estate fees.

the Farm Input Price Indexes

measure price changes of a basket ofgoods and services purchased by

Canadian farmers for use in agriculturalproduction.

the Farm Product Price Indexes


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How the CPI Relates to You

E very month, the news media report the CPIfigures to the Canadian public. Some peoplequestion these figures because their personalexperience does not seem to match what is beingreported. It is important, however, to understandthat the CPI measures the average change in retailprices encountered by all consumers in Canada. Itcannot, and should not, be expected to reflect theprice change experience of any particular householdor person. The CPI basket contains an extensivelist of goods and services. Each consumer buys adifferent combination of these goods and services,and it would be unlikely for any consumer to buyeverything on the list at one point in time. Forinstance, it would be highly unusual to find aconsumer using both fuel oil and natural gas forhome heating. However, both fuels are included inthe CPI since both are important in the spendingpattern of Canadian consumers as a whole.

Information on the spending habits of Canadianhouseholds is obtained periodically from familyexpenditure surveys. In one survey, householdsselected from a random sample are asked to keepa detailed diary of food expenditures over a two-week period. In the other survey, the randomly-selected households are asked to provide detailedinformation on what goods and services werepurchased in the previous calendar year together

1986 while apple prices rose 17.9%. What we canconclude is that, on average, apple prices rose morethan orange prices between 1986 and January1995.

Similarly, in June 1995, the All-items CPI forNewfoundland was 127.8 and for British Columbiait was 137.2 (1986=100). We cannot conclude thatprices as a whole were lower in Newfoundland than

in British Columbia. What we can say is that, onaverage, prices increased more in British Columbiathan they did in Newfoundland between 1986 andJune 1995. The actual prices in Newfoundlandcould very well be higher than those in BritishColumbia.

If you are looking for actual prices or price levelcomparisons, some information is available in the

Consumer Prices and Price Indexes quarterlypublication ( Catalogue No. 62-010-XPB ). Table 5carries average retail pr ices at the Canada level forcertain goods (mostly food items). Table 10compares price levels between eleven Canadiancities for a number of commodity groups. Table 11contains average retail prices for gasoline and fueloil for sixteen Canadian cities. Table 15 comparesprice levels in Ottawa with those of thirteen foreign

cities.

T he CPI is not a cost-of-living index , thoughpeople frequently call it this. In theory, the


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The Goods and ServicesContained in the CPI Basket

T he goods and services included in the CPIbasket are those considered to be consumeritems. They must be associated with a retail price.This retail price is the sum of money that aconsumer must pay to purchase a specific quantityand quality of a good or service. Examples ofexcluded items are income taxes, charitabledonations, contributions made to pension plans, andconsumer savings and investments. Income taxesare excluded because it is impossible to associatea specific amount of tax paid with a specific quantityof services received. By definition , the otherexcluded items are not considered to be consumeritems.

No attempt is made to differentiate betweenluxuries and necessities, and nothing is omittedon the basis of moral or social judgement. Somepeople may regard the use of tobacco and alcoholas socially undesirable. However, these productsare included in the CPI basket because they makeup a notable proportion of the expenditures ofCanadian families and individuals.

HEALTH AND PERSONAL CARE 1

Personal care (+ Health care) Personal care supplies and equipment Oral-hygiene products 2

Toothpaste 3

Indexes are computed for each of the basic classesfound in the classification system. They are aggre-gated following the hierarchy of the classificationto arrive at eight major components, and finally, theAll-items.

The goods and services are organized accordingto a classification system. Every product has aunique place in this classification. Products aregrouped with other items either because they have

ALL-ITEMS, CPI1. Food2. Shelter3. Household operations and furnishings4. Clothing and footwear5. Transportation6. Health and personal care7. Recreation, education and reading8. Alcoholic beverages and tobacco products


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The Relative Importance of Commodities in the CPI Basket

T he spending associated with each basic class in the CPI basket is compared to the totalspending in Canada. These proportions indicatethe relative importance, or weight , of a commodityin the CPI basket. Weights determine the impactthat a particular pr ice change will have on the overallconsumer budget. For example, a 5% rise in theprice of milk would have a much greater impact onthe average budget of consumers than a 5%increase in the price of tea, because people spendon average more money on milk than they do ontea. The weight for Canada assigned to milk(0.69%) is greater than that of tea (0.06%). Withoutweights, price changes for all commodities in theCPI basket would be given equal importance in thecalculation of the All-items index.

Computing the weight for a given commodity is arelativel y simple matter. To illust rate, takeconsumers spending on gasoline. The averagespending per household in a given province 4 ismultiplied by the estimated number of householdsin that province to arrive at the total expenditure for

gasoline. The total expenditures are added upacross provinces to arrive at the estimated totalexpenditures on gasoline for Canada. Theproportion of this estimate to the grand total of

di g ll g d d i i th CPI

Updating the CPI Basket

T he content of the CPI basket is reviewed andupdated periodically to ensure that it remainsrelevant. A major part of this review involvesreplacing existing weights with those obtained fromthe family expenditure surveys of a more recentperiod. Changes in spending patterns reflectchanges in such factors as the composition anddistribution of the population, the quality andavailability of goods and services, personalincomes, wealth, and consumer taste.

In recent years, the CPI weights have been basedon family expenditures for 1974, 1978, 1982 and1986. The current set of weights refer to householdexpenditures for 1992, and were introduced intothe CPI in January 1995.

Basket updates also provide the opportunity toreview CPI methodology, concepts and procedures,and to implement changes. The purpose of thesemodifications is to make the CPI a better indicatorof consumer price movements at the national andprovincial levels.

Collecting Prices

S ince the Consumer Price Index is designed to


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The pricing cycle starts in the first week of eachreference month and extends to the third week ofthe month. The indexes that result from this pricecollection activity represent the entire month. Someusers ask for the index for a particular day of themonth, like April 1, June 15 or December 31. Thisinformation is not available, and users have todecide which months index best meets theirparticular requirements.

Most commodities are priced once a month. Someitems, such as haircuts and dry-cleaning servicesare priced each quarter. Proper ty taxes and tuitionfees are monitored once a year. Generally, the moreoften prices change, the more often they arecollected. In cases where goods appear on themarket seasonally, prices are collected during theseason when they are available. Also, when priceschange outside the scheduled time of collection, a

special price collection may be carried out to ensurethat such changes are reported in the CPI in a timelyfashion.

1992 CPI Weights by Major Component, for Canada, Expressed in Percentages

Recreation,education & reading

10.4%

Transportation18.3%

Alcoholicbeverages &

tobacco products4.5%

Health & personalcare4.3%


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The price collection activity takes place all acrossCanada. It is carried out in outlets from whichconsumers normally buy. The sample of outletsincludes supermarkets, specialty shops, depart-ment stores, garages, dental offices, hairdressingsalons, etc. Bus, rail and air fares, electricity andgas rates, telephone charges, and property taxesare collected from the appropriate local and regionalauthorities. Information on rental charges for living

accommodation is obtained from a monthly surveyof thousands of tenants.

Over 60,000 price quotations are collected eachmonth by skilled interviewers operating out of theregional offices of Statistics Canada. To ensurethat price movements reflect the experience of mostof the population, the interviewers follow the pricesof the brands and varieties which sell in the greatest

volume. Interviewers also try to obtain reasons forsignificant price changes. This information is usedin verifying the data and in explaining the overallresults.

Dealing with Quality Change

The objective of the Consumer Price Index is tomeasure pure price change. As a result, the

quantity and quality of the goods and servicesincluded in the CPI basket have to be held constant.In the real world, however, the quality of goods is

adjustment techniques are described in theConsumer Price Index Reference Paper (Catalogue No. 62-553 ).

The problems encountered in adjusting prices forquality changes are complex and sometimesimpossible to solve in a fully satisfactory manner.This is especially true in evaluating the qualitychange in services. For example, it is fairly easy to

monitor changes in bus ticket prices. But, howwould you attach a dollar value to the changes inthe frequency or punctuality of the bus service? Achange in the quality of that service may well havecontributed towards a change in the bus ticketprices.

Calculating Indexes

O nce price quotations are gathered, theyundergo a careful screening. This is to ensurethe validity of the data that will be used in the CPIcalculations. The checking procedure involves closescrutiny of items for which prices are collected inthe current month to make certain that they areequivalent to those for which prices were collectedin the previous month.

The calculation of the monthly All-items index startswith the measurement of the price change for aparticular product Price indexes for the products


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This ratio indicates a 2.1% increase in the averageprice of cheese in Nova Scotia from January toFebruary.

The third step is to calculate the price index forcheese in Nova Scotia for the month of February.This is obtained by multiplying the index level forJanuary by the price relative for February. If theindex for January was 119.8 (1986=100), theFebruary index would be:

The CPI Time Base

T he time base , or base period , of an index isthe period in which the index is given a valueof 100. At present, the CPI time base is 1986. Thestandard practice, when quoting an index level, isto ensure that the base period is also quoted. Forinstance, the CPI All-items for Canada for the monthof January 1995 was 132.1 (1986=100). Thismeans that consumer prices were 32.1% higher inJanuary 1995 than in 1986. Statistics Canada willalways quote the CPI figures from the current timebase, unless the client specifies otherwise.

The CPI time base is updated periodically tocoincide with the change in the time base of othermajor statistical series at Statistics Canada.Starting with the indexes of January 1983, the CPItime base was changed from 1971 to 1981 The

collected in February are reviewed to ensure thatthey refer to the same quantity and quality ofcheese, and were collected in the same stores, asin the previous month. Average prices for NovaScotia are then calculated for January and Februaryusing this matched sample .

The second step is to compute a monthly price relative . This is the ratio of Februarys average

price to Januarys average price. If the averageprices for January and February were $2.80 and$2.86 respectively, then the price relative forFebruary would be:

119 8 1021 122 3 1986 100( )

in weights and the linking procedures must betaken into account. For a description of themethodology required to perform these tasks, seethe Consumer Price Index Reference Paper(Catalogue No. 62-553 ). Alternatively, please contactthe representatives of the Client Services Unit ofPrices Division (see inside cover) who can adviseyou on how to calculate these types of indexes, or,for a fee, can calculate them on your behalf.

$2.$2.

.8680

1021=


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(a) between a given month and the precedingmonth;

(b) between a given month and the same monthof the previous year; and

(c) between the annual average index of a givenyear and that of the previous year.

The second and third sections of Table 2 featurethese percentage changes. They are calculatedfrom the indexes in the first section.

Rounding may become a factor when the CPI isused for indexation. Statistics Canada recommendsthat the parties to a contract use the most currenttime base to reduce ambiguity or uncertainty.

Calculating Percentage Changes

To illustrate the most frequent calculations donewith price indexes, we shall use data from

Table 2 in the centre of the booklet. Table 2 hasthree sections. In the first section, the index levelsfor the All-items CPI for Canada are given by month.These monthly indexes are averaged over thetwelve calendar months to arrive at the annualaverage index. The three most frequently requestedpercentage changes are those:

All cases that follow will employ this formula.

To illustrate (b) , the percentage change in the indexbetween December 1994 and December 1995 iscalculated as follows:

In this case, the price change over 12 months ispositive, which tells us that prices rose 1.7% onaverage between December 1994 and December

1995 in Canada.To illustrate (c) , the percentage change in the annualaverage index between 1994 and 1995 is calculatedas follows:

The result of this calculation tells us that prices inCanada rose 2 1% on average between the years

13071309

100 100 0 2%..

. =

13391316

100 100 17%..

. =

13351307

100 100 21%..

. =


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The average of the indexes for August, Septemberand October 1995 equals 133.8 while the averageof the indexes for November 1995, December 1995and January 1996 is 134.1. If we take the basicpayment of $394.76, in effect between January andMarch 1996, we obtain the adjusted OAS paymentfor April 1, 1996 by doing the following calculation:

This means that the OAS payment of $394.76 willincrease by 0.2% or $0.79 on April 1, making theadjusted payment $395.55.

Example 3

Canada Pension Plan (CPP) payments are indexedonce a year in January. The CPP formula averagesthe indexes for twelve consecutive months, dividesthe result by the average of the preceding twelvemonths, multiplies by 100, and then subtracts 100.The observed twelve months refer to the periodfrom November of one year to October of the next.As an example, take a hypothetical CPP paymentof $450 a month. The average of the indexes forNovember 1993 to October 1994 is 130.7, and theaverage for November 1994 to October 1995 is133.1. The Consumer Price Index increased by1.8% between these two periods. The CPPpa ment o ld therefore increase b $8 10 to

Using the CPI to Adjust Payments

W hen the Consumer Price Index is used as anescalation tool, a clause is written into acontract by which a sum of money to be paid in thefuture is automatically adjusted by changes in theCPI. This type of clause is called an escalation clause . In many contracts, they are called cost- of-living adjustment or COLA clauses . Here aresome examples.

Example 1

Assume a separation or divorce agreement containsthe following clause: The basic child supportpayment is $300 per month effective May 1, 1994.Every May 1 thereafter, payments will be adjustedby the percentage change over 12 months in theMarch All-items CPI for Canada.

This contract clause means that the child supportpayments will be adjusted at whatever percentagechange the index shows between March 1994 andMarch 1995, then again between March 1995 andMarch 1996, and so forth. From Table 2 (in the centreof the booklet), we see that the All-items CPI forCanada increases were 2.2% in the first year and1.4% in the second.

On May 1, 1995, the monthly support paymentwould increase by $6.60, which is 2.2% of $300,

13411338 100 100 0 2%

.. .

=


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This means that, in May 1996, $1.00 had the samevalue as 73.7 cents did in 1986.

Each month, Statistics Canada calculates thepurchasing power of the dollar, using the abovemethod, by comparing the monthly All-items indexfor Canada to the current base period (1986=100)

of the CPI. However, you can compare thepurchasing power of money between any twoperiods.

For instance, if you wanted to know how muchmoney in July 1995 had the same purchasing poweras $1,000 did in January 1977, you would use theCPI indexes for these two months (the January 1977index is 49.1, and the July 1995 index is 134.0),

and perform the following calculation:

The figures in Column (1) include the effects of pricechanges. These expenses are converted into

constant 1986 dollars by dividing them by thecorresponding 1986-based indexes shown inColumn (2), and multiplying the result by 100 (theindex of the base year). The results in Column (3)h h f ll h i h h

can readily conclude that consumer prices rose35.7% between 1986 and May 1996.

To find out how much money in 1986 had the samepurchasing power as $1.00 did in May 1996, thecalculation is:

These figures cannot be compared directly to oneanother because a dollar in 1985, in 1990, and in1995 was not worth the same amount. To comparedollar figures over time, we must convert the currentdollar values to constant dollar values. Thismeans that the current dollar figures are allre-expressed in terms of the value of the dollar at aspecific time. The CPI is often used to do thisconversion, and here, we show how it is done.1000

135700 737 73 7.

.$1. $0. = or . cents

(1) (2) (3)Expensesin Current

Dollars

All-itemsCPI

(1986=100)

Expensesin

Constant1986

Dollars

1985 $20,000 96.0 $20,8331990 $25,000 119.5 $20,9211995 $30,000 133.5 $22,472

1340491

000 2 729 000 729. $1, . $1, $2, = =


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Correct

CPI and Other RelatedPublications

Some CPI data are also available in:The Canadian Economic Observer ,(Monthly), Catalogue No. 11-010-XPB , acompendium publication.

Information regarding the latest Family ExpenditureSurveys is contained in two volumes:

Family Food Expenditure in Canada ,1992 , Catalogue No. 62-554 ; and

Family Expenditure in Canada, 1992 ,Catalogue No. 62-555 .

Educators will find the E-STAT CD-ROM ,which includes teaching materials, auseful tool for introducing the CPI to theirclasses. Please contact the StatisticsCanada Regional Reference Centrenearest you for more details.

Incorrect

50 0% 391% 10 9%. . . =

$22,$20,

.472833

100 100 7 9% =

According to the method mentioned in the previousparagraph, the increase in expenditures would be10.9%. However, the actual increase is 7.9%.

$30,$20,000000 100 =100 50.0%

and

133596 0

100..

=100 39.1%

To find out how to obtain these or other StatisticsCanada publications, please see the inside frontcover of this booklet.


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Glossary of TermsBase period - A synonym of the time base of an index.Basic class - The lowest-level aggregates of commodities for which a set

of weights is available (normally derived from the familyexpenditure surveys) that is consistent with the fixed-basket concept of the CPI.

Constant dollars - A valuation in constant dollars is expressed at the prices

prevailing during some fixed reference or base period.Cost-of-living adjustment clause (COLA)

- A clause written into a contract which links wage increasesto movements in the CPI.

Cost-of-living index - In theory, the objective behind a cost-of-living index is tomeasure price changes experienced by consumers inmaintaining a constant standard of living. The idea is thatconsumers would normally switch between products as theprice relationship of goods changes.

Current dollars - A valuation in current dollars expressed at the prices pre-vailing during the period being referred to.

Deflation - A downward movement in the average level of prices.Escalation clause - A clause written into a contract which stipulates that a sum

of money to be paid on a regular basis will automatically beadjusted by changes in a price index.

Fixed basket - A set of commodities with specified and unchanging quan-titative proportions among its constituent goods andservices.

Fixed-basket price index - A ratio of the cost of a specified basket in the observedperiod to its cost in the base period.Inflation - An upward movement in the average level of prices.Linking procedure - A procedure for connecting, in a certain link period, two

i i d i f i h f h


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Glossary of Terms (concluded)

Pure price movement - Price movement that is not attributable to changes in eitherthe quality or the quantity of a given good or service.

Time base - The period whose prices serve as a base for comparing theobserved period prices; in other words, the period in whichan index is 100 in percentage form or 1 in ratio form.

Updating of fixed baskets - The replacement of a basket by one that is more recent.Weight - The value assigned to each basic class, which indicates itsimportance in the fixed basket. In the computation of a

specific weighted average of price indexes, to obtain anaggregate price index, the weight of each basic class ismultiplied by the corresponding price index. Therefore, theweight determines the degree of influence exerted by theprice change of each basic class on the correspondingaggregate price index.


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Your Guide to the CPI Votre guide dutilisation de lIPC

Statistics Canada - Catalogue No. 62-557-XPB Statistique Canada - n o 62-557-XPB au catalogue

1 - World War I 1 - Premire guerre mondiale 2 - Recession 2 - Rcession 3 - Great Depression 3 - Grande dpression 4 - Recession in the U.S.A. 4 - Rcession aux tats-Unis 5 - World War II 5 - Deuxime guerre mondiale 6 - Price Controls 6 - Contrles de prix 7 - Explosion of Pent-up Demand 7 - Expansion de la demande refoule 8 - Korean War 8 - Guerre de Core 9 - Credit Controls 9 - Contrles de crdit10 - Period of Sustained Growth 10 - Priode de croissance soutenue11 - First Oil Crisis 11 - Premire crise du ptrole12 - Anti-inflation Board 12 - Commission de la lutte contre linflation13 - Second Oil Crisis 13 - Deuxime crise du ptrole14 - Wage Controls and Recession 14 - Contrles des salaires et rcession15 - Goods and Services Tax (GST) 15 - Taxe sur les produits et services (TPS)16 - Cigarette Tax Reduction 16 - Rduction des taxes sur les cigarettes

Annual Rates of Cha nge in the CPI, Canada, 1915-1995Taux a nnuels de variation d e l'IPC, Canada, 1915-1995

-15

-10

-5

0

5

10

15

20

1 9 1 5

1 9 2 0

1 9 2 5

1 9 3 0

1 9 3 5

1 9 4 0

1 9 4 5

1 9 5 0

1 9 5 5

1 9 6 0

1 9 6 5

1 9 7 0

1 9 7 5

1 9 8 0

1 9 8 5

1 9 9 0

1 9 9 5

1 2

3 4

56

7 8

9 10

1112

13 14

15

16


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Your Guide to the CPI Votre guide dutilisation de lIPC

TABLE - 2 TABLEAU - 2

The Consumer Price Index for Canada, All-i tems Indice d'ensemble des prix la consommation pour le(Not Seasonally Adjusted) , 1972-1996, 1986=100 Canada, (non dsaisonnalis), 1972-1996, 1986=100

January February March April May June July August September October November December Annualaverage

Janvier Fvrier Mars Avril Mai Juin Juillet Aot Septembre Octobre Novembre Dcembre Moyenneannuelle

Indexes Indices

1972 32.7 32.8 32.9 33.0 33.1 33.1 33.5 33.8 33.9 33.9 34.0 34.2 33.41973 34.5 34.7 34.8 35.2 35.4 35.8 36.1 36.6 36.8 36.9 37.2 37.4 36.01974 37.7 38.1 38.4 38.7 39.4 39.9 40.1 40.6 40.8 41.2 41.6 42.0 39.9

1975 42.2 42.5 42.7 43.0 43.4 44.0 44.6 45.0 45.1 45.5 45.9 46.0 44.21976 46.2 46.5 46.6 46.8 47.2 47.4 47.6 47.8 48.0 48.3 48.5 48.7 47.51977 49.1 49.5 50.1 50.4 50.8 51.1 51.6 51.8 52.1 52.6 52.9 53.3 51.31978 53.5 53.9 54.5 54.6 55.4 55.8 56.6 56.7 56.6 57.2 57.6 57.8 55.91979 58.2 58.8 59.5 59.9 60.5 60.8 61.3 61.5 62.0 62.5 63.1 63.4 61.01980 63.8 64.4 65.0 65.4 66.2 66.9 67.4 68.1 68.7 69.3 70.2 70.5 67.21981 71.5 72.2 73.1 73.7 74.3 75.5 76.1 76.7 77.3 78.0 78.7 79.1 75.51982 79.6 80.6 81.6 82.0 83.2 84.0 84.4 84.8 85.3 85.8 86.4 86.4 83.71983 86.2 86.6 87.5 87.5 87.7 88.7 89.0 89.5 89.5 90.0 90.0 90.3 88.51984 90.8 91.3 91.5 91.8 91.9 92.3 92.8 92.8 92.9 93.1 93.7 93.7 92.41985 94.1 94.7 94.9 95.3 95.5 96.1 96.4 96.5 96.7 97.0 97.4 97.8 96.0

1986 98.3 98.6 98.9 99.0 99.5 99.6 100.4 100.7 100.7 101.2 101.7 101.9 100.01987 102.1 102.6 103.0 103.5 104.1 104.4 105.1 105.2 105.2 105.6 106.0 106.1 104.41988 106.3 106.7 107.3 107.6 108.3 108.5 109.1 109.4 109.5 110.0 110.3 110.3 108.61989 110.9 111.6 112.2 112.5 113.7 114.3 115.0 115.1 115.3 115.7 116.1 116.0 114.01990 117.0 117.7 118.1 118.1 118.7 119.2 119.8 119.9 120.2 121.2 121.9 121.8 119.51991 125.0 125.0 125.5 125.5 126.1 126.7 126.8 126.9 126.7 126.5 127.0 126.4 126.21992 127.0 127.1 127.5 127.6 127.8 128.1 128.4 128.4 128.3 128.5 129.1 129.1 128.11993 129.6 130.0 129.9 129.9 130.1 130.2 130.5 130.6 130.7 130.9 131.5 131.3 130.41994 131.3 130.3 130.1 130.2 129.9 130.2 130.7 130.8 130.9 130.7 131.4 131.6 130.71995 132.1 132.7 133.0 133.4 133.7 133.7 134.0 133.8 133.9 133.8 134.1 133.9 133.51996 134.2 134.4 134.9 135.3 135.7 135.6 135.6 135.7 135.9 136.2


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Statistics Canada - Catalogue No. 62-557-XPB Statistique Canada - n o 62-557-XPB au catalogue

January February March April May June July August September October November December Annualaverage

Janvier Fvrier Mars Avril Mai Juin Juillet Aot Septembre Octobre Novembre Dcembre Moyenneannuelle

Monthly percentage changes Taux mensuels de variation

1982 0.6 1.3 1.2 0.5 1.5 1.0 0.5 0.5 0.6 0.6 0.7 0.01983 -0.2 0.5 1.0 0.0 0.2 1.1 0.3 0.6 0.0 0.6 0.0 0.3

1984 0.6 0.6 0.2 0.3 0.1 0.4 0.5 0.0 0.1 0.2 0.6 0.01985 0.4 0.6 0.2 0.4 0.2 0.6 0.3 0.1 0.2 0.3 0.4 0.41986 0.5 0.3 0.3 0.1 0.5 0.1 0.8 0.3 0.0 0.5 0.5 0.21987 0.2 0.5 0.4 0.5 0.6 0.3 0.7 0.1 0.0 0.4 0.4 0.11988 0.2 0.4 0.6 0.3 0.7 0.2 0.6 0.3 0.1 0.5 0.3 0.01989 0.5 0.6 0.5 0.3 1.1 0.5 0.6 0.1 0.2 0.3 0.3 -0.11990 0.9 0.6 0.3 0.0 0.5 0.4 0.5 0.1 0.3 0.8 0.6 -0.11991 2.6 0.0 0.4 0.0 0.5 0.5 0.1 0.1 -0.2 -0.2 0.4 -0.51992 0.5 0.1 0.3 0.1 0.2 0.2 0.2 0.0 -0.1 0.2 0.5 0.01993 0.4 0.3 -0.1 0.0 0.2 0.1 0.2 0.1 0.1 0.2 0.5 -0.21994 0.0 -0.8 -0.2 0.1 -0.2 0.2 0.4 0.1 0.1 -0.2 0.5 0.2

1995 0.4 0.5 0.2 0.3 0.2 0.0 0.2 -0.1 0.1 -0.1 0.2 -0.11996 0.2 0.1 0.4 0.3 0.3 -0.1 0.0 0.1 0.1 0.2

Annual percentage changes Taux annuels de variation

1982 11.3 11.6 11.6 11.3 12.0 11.3 10.9 10.6 10.3 10.0 9.8 9.2 10.91983 8.3 7.4 7.2 6.7 5.4 5.6 5.5 5.5 4.9 4.9 4.2 4.5 5.71984 5.3 5.4 4.6 4.9 4.8 4.1 4.3 3.7 3.8 3.4 4.1 3.8 4.41985 3.6 3.7 3.7 3.8 3.9 4.1 3.9 4.0 4.1 4.2 3.9 4.4 3.91986 4.5 4.1 4.2 3.9 4.2 3.6 4.1 4.4 4.1 4.3 4.4 4.2 4.21987 3.9 4.1 4.1 4.5 4.6 4.8 4.7 4.5 4.5 4.3 4.2 4.1 4.41988 4.1 4.0 4.2 4.0 4.0 3.9 3.8 4.0 4.1 4.2 4.1 4.0 4.01989 4.3 4.6 4.6 4.6 5.0 5.3 5.4 5.2 5.3 5.2 5.3 5.2 5.01990 5.5 5.5 5.3 5.0 4.4 4.3 4.2 4.2 4.2 4.8 5.0 5.0 4.81991 6.8 6.2 6.3 6.3 6.2 6.3 5.8 5.8 5.4 4.4 4.2 3.8 5.61992 1.6 1.7 1.6 1.7 1.3 1.1 1.3 1.2 1.3 1.6 1.7 2.1 1.51993 2.0 2.3 1.9 1.8 1.8 1.6 1.6 1.7 1.9 1.9 1.9 1.7 1.81994 1.3 0.2 0.2 0.2 -0.2 0.0 0.2 0.2 0.2 -0.2 -0.1 0.2 0.21995 0.6 1.8 2.2 2.5 2.9 2.7 2.5 2.3 2.3 2.4 2.1 1.7 2.11996 1.6 1.3 1.4 1.4 1.5 1.4 1.2 1.4 1.5 1.8

1 The annual index level is the average of the 12 individual monthly indexes. The percentage change for a given calendar year is calculated using the annual average indexes.1 Le niveau de l'indice annuel est la moyenne des 12 indices individuels mensuels. Le pourcentage de variation pour une anne civile donne est calcul en utilisant les indices de la moyenne annuelle.

guide to consumer price indez

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