Consumer Price Index: A preview of the upcoming basket update

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Statistics Canada has announced a major update of the Consumer Price Index to reflect changes in the spending patterns of Canadian households.

The update, which occurs periodically, is designed to ensure the CPI's reliability for three key purposes, a measure of inflation, a statistical series deflator, and a tool for indexing various payments and transfers.

The update will take effect on June 19, 2007, when data for the reference period of May 2007 are released in The Daily.

It will include two major changes: the weights of various items in the basket of goods and services used to calculate the index will be updated from 2001 to 2005; and the CPI base year (the period for which the value 100 is assigned to the index) will change from 1992 to 2002.

In addition, changing base periods requires the creation of new tables in CANSIM, Statistics Canada's database. The existing series will be discontinued. The new tables and identifiers will be announced in the spring of 2007 and will be available on June 19, 2007.

Also, the content and format of two publications will be reviewed and updated: Your Guide to the Consumer Price Index (62-557-XIB) and Consumer Price Index (62-001-XIB). An update of the Consumer Price Index Reference Paper is planned at a later date.

Although the CPI base year will change from 1992 to 2002, the base period 1992=100 will still be retained for the all-items index. The Consumer Price Index with base period 1986=100 will be discontinued.

In the case of the 1986=100 series, a conversion factor will be available to users on request. When changes occur in the base year, they will be synchronized with changes in the Canadian System of National Accounts.

Users should note that the changeover to the base year 2002=100 will in no way alter rates of changes measured for previous periods, barring rounding.

The weights for the various components of the basket of goods and services are being updated on the basis of the most recent Survey of Household Spending (SHS). The update ensures that the CPI reflects any changes in the consumption patterns of Canadians.

The weights between January 2003 and mid-2007 are based on 2001 consumption patterns. The new basket will be based on patterns captured by the 2005 SHS.

A special effort has been made to ensure that information technology products are reflected as accurately as possible in the CPI, particularly since they have evolved at a dizzying pace in recent years.

The "rental of videotapes and videodiscs" index will be expanded to include the rental of video games for consoles.

The "photographic equipment" and "photographic services and supplies" categories will be redefined to provide a clearer distinction between the goods component and the services component. After the update, the new categories will be "photographic equipment and supplies" and "photographic services."

The "audio discs and tapes" purchase and the "video tapes and videodiscs" purchase indexes will be replaced with a single index covering the purchase of both audio and video media.

Though unpublished, structures under the "video equipment" and "audio equipment" headings will be updated to include new electronic products.

A special effort has also been made to reflect recent new trends in health care. Two new indexes will be published: one for ophthalmological goods, and another for ophthalmological services.

A final, less important change was dictated by the elimination of detail in the SHS. Detailed indexes for "cooking utensils" and "tableware and flatware" will be discontinued. Now, only the "kitchen utensils, tableware and flatware" aggregate will be published.

Two new special aggregates will be computed and disseminated: the CPI all-items less gasoline and the CPI all-items less housing, insurance and financial services.

For more information, contact Client Services (toll-free 1-866-230-2248; 613-951-9606; fax 613-951-1539; prices-prix@statcan.gc.ca), Prices Division.