Consumer price indexes
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Selected geographical area: Canada
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2.9%
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1.9%
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Selected geographical area: Canada
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6.5%
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3.0%
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157.13.9%
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$239.308.1%
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- Articles and reports: 12-001-X19990014710Description:
Most statistical offices select the sample of commodities of which prices are collected for their Consumer Price Indexes with non-probability techniques. In the Netherlands, and in many other countries as well, those judgemental sampling methods come close to some kind of cut-off selection, in which a large part of the population (usually the items with the lowest expenditures) is deliberately left unobserved. This method obviously yields biased price index numbers. The question arises whether probability sampling would lead to better results in terms of the mean square error. We have considered simple random sampling, stratified sampling and systematic sampling proportional to expenditure. Monte Carlo simulations using scanner data on coffee, baby's napkins and toilet paper were carried out to assess the performance of the four sampling designs. Surprisingly perhaps, cut-off selection is shown to be a successful strategy for item sampling in the consumer price index.
Release date: 1999-10-08 - 2. Core Inflation: A Weighted Median Index ArchivedArticles and reports: 62F0014M1998007Geography: CanadaDescription:
Over the years, the concept of core inflation has become of crucial importance for the central banks of various countries. Indeed, many of them have at some point given themselves the mandate to reduce inflation and achieve price stability. The Bank of Canada undertook this mandate in February 1991.
Core inflation should reflect what is basic in price movements and ignore temporary fluctuations that have no long-term impact on prices. The phenomenon of core inflation must be of a lasting nature. The targets were initially set on the basis of the overall consumer price index (CPI). However, the Bank of Canada has stated that for practical reasons, it will focus on the consumer price index excluding the volatile food and energy components.
The question that many are asking is the following: is a measure such as the CPI excluding food and energy a good indicator of core inflation? At the meeting of the 1996 Price Measurement Advisory Committee, a review of the literature on core inflation was presented. The Committee recommended taking a closer look at a weighted median index as a means of estimating core inflation. This study deals with the question of a weighted median index and covers the period of January 1985 to January 1997. The rates of change in the weighted median index calculated from monthly movements are quite often lower than the rates of change in the official index. This behaviour reflects the usual distribution of monthly price movements for the CPI, meaning a large proportion of the monthly movements are close to zero, and the remaining price movements are, in majority, positive. Because of this behaviour of monthly movements, the weighted median index advances much more slowly than the official index. This behaviour is just as evident when inflation advances at annual rates of 4% to 5% as when it ranges around 2%. An index based on the weighted median of monthly movements in the CPI yields somewhat disconcerting results. Even though some think that the official CPI does not clearly reflect the concept of core inflation, one does not necessarily expect to see such a large gap develop over time.
Release date: 1999-10-05 - 3. Consumer Prices and Price Indexes ArchivedTable: 62-010-XDescription:
The publication highlights current and historical statistics on consumer prices and related price indexes. A comparative index contains retail price differentials for 11 major cities by selected groups of consumer goods and services.
Release date: 1999-08-03 - 4. Service Inflation: Why Is It Higher? ArchivedArticles and reports: 62F0014M1997005Geography: CanadaDescription:
Since 1961, the service component of the Canadian Consumer Price Index (CPI) has generally shown a higher rate of increase than the goods component. Furthermore, when some of the more volatile components of the CPI are removed the spread widens. For instance, during the same period core goods inflation (excluding food and energy) increased at an annual rate of 4.3% compared to 6.1% per cent for services (excluding shelter). The literature on service sector inflation suggests five explanations for this phenomenon. Although all these sources of the inflation differential are interesting and important in their own right, this paper will examine two. Some believe that service inflation is a statistical artifact stemming from the inherent difficulties in measuring the output of services and hence their price changes. This issue will be examined first. Indeed the measurement problem appears more serious for services; however it cannot be held completely responsible for the inflationary gap. William Baumol (1967) originally suggested the other cause for higher service inflation whereby unbalanced sectorial growth would be the cause of the divergent inflation rates. This explanation will be the focus of the second part of the paper. In spite of the attractiveness of Baumol's model, empirical evidence rejects the hypothesis.
Release date: 1999-05-13 - 5. The Impact on the CPI of Not Surveying House Prices in Rural Regions: A Sensitivity Analysis ArchivedArticles and reports: 62F0014M1997008Geography: Province or territoryDescription:
In light of a recent change in population coverage, this study was initiated to determine whether the integrity of the Consumer Price Index (CPI) should be questioned on the grounds that it does not explicitly take into account rural house price movements. An attempt is made here to quantify the potential impact, using various regimes of artificial data to represent house price movements for rural regions. The regimes were manufactured in a way that allowed the analysis of differences between urban and rural regions in terms of the evolution of house prices, as well as differences in their cumulative price index levels. Three provinces were considered: Newfoundland, Saskatchewan, and British Columbia, all of which have large rural populations. The study results were monthly indexes for the time period, January 1986 to December 1994. The general conclusion was that house prices in rural regions would have to move very differently from those in urban regions to affect the overall level of the CPI. However, in the case of lower-level aggregates the failure to include rural house prices could be having an important effect. In addition, even when cumulative house price movements for rural and urban regions are similar, differences in their evolution tend to have an effect on the trend of the CPI, especially in the case of lower-level aggregates. While it is tempting to conclude that the current CPI methodology is robust enough to apply to the expanded population, this would be based purely on conjecture about the nature of movements in rural house prices. Hence, a second phase of this study will be initiated, whose purpose will be to develop a methodology to construct price indexes for rural regions.
Release date: 1999-05-13 - 6. An Application of the Hedonic Approach to Clothing Items in the Consumer Price Index (CPI) ArchivedArticles and reports: 62F0014M1997009Geography: CanadaDescription:
A research program was recently initiated by Prices Division to explore the feasibility of using the hedonic approach for making quality adjustments in the Consumer Price Index (CPI) for clothing items. The current paper is the first of a series, which attempts to derive hedonic quality adjustments for Men's Dress Shirts. A database for quality characteristics is first constructed, from which two experimental hedonic models are estimated. One of these models is then used to produce hedonic quality adjustments for all shirt substitutions that have occurred subsequent to May 1995 up to June 1996. These values are then compared with the actual quality adjustments used in the official CPI. Although results are preliminary, three important conclusions can be made. First, quality adjustments derived using the hedonic versus the traditional approach are very different, at least at the level of individual substitutions. Which of the two approaches is more accurate, however, is not evident at this premature stage. Second, the integrity of the data on quality characteristics will have to improve greatly if the hedonic approach is ever to be considered as a viable alternative. Finally, improving the source data on quality characteristics would be of value whether or not the hedonic approach is adopted for making quality adjustments. One of the ways this could be done would be to adopt the checklist approach, which is the current procedure in the United States and in Sweden.
Release date: 1999-05-13 - Articles and reports: 62F0014M1998006Geography: CanadaDescription:
Statistical agencies such as Statistics Canada are investigating the use of scanner data for their own purposes. Interest has grown in the potential uses of this data to improve the quality of price indexes. This paper reports on initial research done in Prices Division. The paper looks at scanner data and the feasibility of its use to produce CPI estimates; evaluates current CPI methodology and procedures; and the impact that use of scanner data would have on the CPI commodity indexes. The main focus of the study, however, is to explore the impact that scanner data would have on the CPI basic commodity indexes covered by scannable items. Since the CPI criterion relates to a limited selection of scanner data, an examination will be made of the impact of gradually relaxing the criteria to include more products and outlets from the scanner data. The initial subset was derived by applying the CPI criteria of volume selling brands and outlets. Each of these changes in criteria yielded a different subset of scanner data. Calculations were performed using these various subsets of scanner data and their results compared to the CPI. An analysis of the results will be used in determining the strengths and limitations of CPI data, detect any deficiencies and provide information for revision of pricing selection.
Release date: 1999-05-13 - Articles and reports: 62F0014M1998011Geography: CanadaDescription:
This paper is the second in a series reporting on the current progress of a study whose purpose is to explore the feasibility of using the hedonic approach for making quality adjustments to the Clothing component of the Consumer Price Index (CPI). In this phase of the study, two preliminary checklists were developed for obtaining prices and quality characteristics for Men's Dress Shirts and Men's Sports Jackets. These checklists were then used for data collection in the field on expanded CPI samples for the two items. To date, the resulting database for Men's Dress Shirts has been used to derive a hedonic model. The main conclusions that can be made at this point are: 1) checklists represent a certain improvement over the current method of reporting and should be developed for all clothing items in the CPI; 2) if the hedonic approach to quality adjustment in clothing is to be formally adopted then the CPI samples will have to be augmented, at least periodically to permit estimation; and 3) more experience is needed with the hedonic approach in research mode, using clothing items with more complexity, before we can say whether the hedonic approach should be formally adopted as an alternative to our current method of quality adjustment for clothing items.
Release date: 1999-05-13 - Articles and reports: 62F0014M1998012Geography: CanadaDescription:
This paper examines the methods of adjustment for quality change made in the Canadian Consumer Price Index for the period 1989 to 1994. It finds that in most cases the current Canadian practice ensures that the replacement of one commodity by another, one variety of a commodity by another, or one outlet by another, has no impact on the overall index. The main exceptions to this result occur when replacing varieties of commodities that are purchased only occasionally, and a judgement is made that the quality ratio between the old and new variety is not the same as the ratio of their prices. In these cases there is an impact on the index, up or down, depending on whether the change in price reported is higher or lower than the change in quality. From the experience of the CPI in these six years there has been a correlation between the price ratio of a variety and its replacement and the index movement that derives from the judgement. The direction and size of the impact on the index depends largely on whether an item is replaced with a higher or lower priced item. For these reasons, the paper argues that more attention should be paid to ensuring that the item selection is more representative of current sales than has traditionally been the case.
Release date: 1999-05-13 - 10. Comparative Study of Analytical Consumer Price Indexes for Different Subgroups of the Reference Population ArchivedArticles and reports: 62F0014M1998013Geography: CanadaDescription:
The reference population for the Consumer Price Index (CPI) has been represented, since the 1992 updating of the basket of goods and services, by families and unattached individuals living in private urban or rural households. The official CPI is a measure of the average percentage change over time in the cost of a fixed basket of goods and services purchased by Canadian consumers.
Because of the broadly defined target population of the CPI, the measure has been criticised for failing to reflect the inflationary experiences of certain socio-economic groups. This study examines this question for three sub-groups of the reference population of the CPI. It is an extension of earlier studies on the subject done at Statistics Canada.
In this document, analytical consumer price indexes sub-group indexes are compared to the analytical index for the whole population calculated at the national geographic level.
The findings tend to point to those of earlier Statistics Canada studies on sub-groups in the CPI reference population. Those studies have consistently concluded that a consumer price index established for a given sub-group does not differ substantially from the index for the whole reference population.
Release date: 1999-05-13
Data (1)
Data (1) ((1 result))
- 1. Consumer Prices and Price Indexes ArchivedTable: 62-010-XDescription:
The publication highlights current and historical statistics on consumer prices and related price indexes. A comparative index contains retail price differentials for 11 major cities by selected groups of consumer goods and services.
Release date: 1999-08-03
Analysis (10)
Analysis (10) ((10 results))
- Articles and reports: 12-001-X19990014710Description:
Most statistical offices select the sample of commodities of which prices are collected for their Consumer Price Indexes with non-probability techniques. In the Netherlands, and in many other countries as well, those judgemental sampling methods come close to some kind of cut-off selection, in which a large part of the population (usually the items with the lowest expenditures) is deliberately left unobserved. This method obviously yields biased price index numbers. The question arises whether probability sampling would lead to better results in terms of the mean square error. We have considered simple random sampling, stratified sampling and systematic sampling proportional to expenditure. Monte Carlo simulations using scanner data on coffee, baby's napkins and toilet paper were carried out to assess the performance of the four sampling designs. Surprisingly perhaps, cut-off selection is shown to be a successful strategy for item sampling in the consumer price index.
Release date: 1999-10-08 - 2. Core Inflation: A Weighted Median Index ArchivedArticles and reports: 62F0014M1998007Geography: CanadaDescription:
Over the years, the concept of core inflation has become of crucial importance for the central banks of various countries. Indeed, many of them have at some point given themselves the mandate to reduce inflation and achieve price stability. The Bank of Canada undertook this mandate in February 1991.
Core inflation should reflect what is basic in price movements and ignore temporary fluctuations that have no long-term impact on prices. The phenomenon of core inflation must be of a lasting nature. The targets were initially set on the basis of the overall consumer price index (CPI). However, the Bank of Canada has stated that for practical reasons, it will focus on the consumer price index excluding the volatile food and energy components.
The question that many are asking is the following: is a measure such as the CPI excluding food and energy a good indicator of core inflation? At the meeting of the 1996 Price Measurement Advisory Committee, a review of the literature on core inflation was presented. The Committee recommended taking a closer look at a weighted median index as a means of estimating core inflation. This study deals with the question of a weighted median index and covers the period of January 1985 to January 1997. The rates of change in the weighted median index calculated from monthly movements are quite often lower than the rates of change in the official index. This behaviour reflects the usual distribution of monthly price movements for the CPI, meaning a large proportion of the monthly movements are close to zero, and the remaining price movements are, in majority, positive. Because of this behaviour of monthly movements, the weighted median index advances much more slowly than the official index. This behaviour is just as evident when inflation advances at annual rates of 4% to 5% as when it ranges around 2%. An index based on the weighted median of monthly movements in the CPI yields somewhat disconcerting results. Even though some think that the official CPI does not clearly reflect the concept of core inflation, one does not necessarily expect to see such a large gap develop over time.
Release date: 1999-10-05 - 3. Service Inflation: Why Is It Higher? ArchivedArticles and reports: 62F0014M1997005Geography: CanadaDescription:
Since 1961, the service component of the Canadian Consumer Price Index (CPI) has generally shown a higher rate of increase than the goods component. Furthermore, when some of the more volatile components of the CPI are removed the spread widens. For instance, during the same period core goods inflation (excluding food and energy) increased at an annual rate of 4.3% compared to 6.1% per cent for services (excluding shelter). The literature on service sector inflation suggests five explanations for this phenomenon. Although all these sources of the inflation differential are interesting and important in their own right, this paper will examine two. Some believe that service inflation is a statistical artifact stemming from the inherent difficulties in measuring the output of services and hence their price changes. This issue will be examined first. Indeed the measurement problem appears more serious for services; however it cannot be held completely responsible for the inflationary gap. William Baumol (1967) originally suggested the other cause for higher service inflation whereby unbalanced sectorial growth would be the cause of the divergent inflation rates. This explanation will be the focus of the second part of the paper. In spite of the attractiveness of Baumol's model, empirical evidence rejects the hypothesis.
Release date: 1999-05-13 - 4. The Impact on the CPI of Not Surveying House Prices in Rural Regions: A Sensitivity Analysis ArchivedArticles and reports: 62F0014M1997008Geography: Province or territoryDescription:
In light of a recent change in population coverage, this study was initiated to determine whether the integrity of the Consumer Price Index (CPI) should be questioned on the grounds that it does not explicitly take into account rural house price movements. An attempt is made here to quantify the potential impact, using various regimes of artificial data to represent house price movements for rural regions. The regimes were manufactured in a way that allowed the analysis of differences between urban and rural regions in terms of the evolution of house prices, as well as differences in their cumulative price index levels. Three provinces were considered: Newfoundland, Saskatchewan, and British Columbia, all of which have large rural populations. The study results were monthly indexes for the time period, January 1986 to December 1994. The general conclusion was that house prices in rural regions would have to move very differently from those in urban regions to affect the overall level of the CPI. However, in the case of lower-level aggregates the failure to include rural house prices could be having an important effect. In addition, even when cumulative house price movements for rural and urban regions are similar, differences in their evolution tend to have an effect on the trend of the CPI, especially in the case of lower-level aggregates. While it is tempting to conclude that the current CPI methodology is robust enough to apply to the expanded population, this would be based purely on conjecture about the nature of movements in rural house prices. Hence, a second phase of this study will be initiated, whose purpose will be to develop a methodology to construct price indexes for rural regions.
Release date: 1999-05-13 - 5. An Application of the Hedonic Approach to Clothing Items in the Consumer Price Index (CPI) ArchivedArticles and reports: 62F0014M1997009Geography: CanadaDescription:
A research program was recently initiated by Prices Division to explore the feasibility of using the hedonic approach for making quality adjustments in the Consumer Price Index (CPI) for clothing items. The current paper is the first of a series, which attempts to derive hedonic quality adjustments for Men's Dress Shirts. A database for quality characteristics is first constructed, from which two experimental hedonic models are estimated. One of these models is then used to produce hedonic quality adjustments for all shirt substitutions that have occurred subsequent to May 1995 up to June 1996. These values are then compared with the actual quality adjustments used in the official CPI. Although results are preliminary, three important conclusions can be made. First, quality adjustments derived using the hedonic versus the traditional approach are very different, at least at the level of individual substitutions. Which of the two approaches is more accurate, however, is not evident at this premature stage. Second, the integrity of the data on quality characteristics will have to improve greatly if the hedonic approach is ever to be considered as a viable alternative. Finally, improving the source data on quality characteristics would be of value whether or not the hedonic approach is adopted for making quality adjustments. One of the ways this could be done would be to adopt the checklist approach, which is the current procedure in the United States and in Sweden.
Release date: 1999-05-13 - Articles and reports: 62F0014M1998006Geography: CanadaDescription:
Statistical agencies such as Statistics Canada are investigating the use of scanner data for their own purposes. Interest has grown in the potential uses of this data to improve the quality of price indexes. This paper reports on initial research done in Prices Division. The paper looks at scanner data and the feasibility of its use to produce CPI estimates; evaluates current CPI methodology and procedures; and the impact that use of scanner data would have on the CPI commodity indexes. The main focus of the study, however, is to explore the impact that scanner data would have on the CPI basic commodity indexes covered by scannable items. Since the CPI criterion relates to a limited selection of scanner data, an examination will be made of the impact of gradually relaxing the criteria to include more products and outlets from the scanner data. The initial subset was derived by applying the CPI criteria of volume selling brands and outlets. Each of these changes in criteria yielded a different subset of scanner data. Calculations were performed using these various subsets of scanner data and their results compared to the CPI. An analysis of the results will be used in determining the strengths and limitations of CPI data, detect any deficiencies and provide information for revision of pricing selection.
Release date: 1999-05-13 - Articles and reports: 62F0014M1998011Geography: CanadaDescription:
This paper is the second in a series reporting on the current progress of a study whose purpose is to explore the feasibility of using the hedonic approach for making quality adjustments to the Clothing component of the Consumer Price Index (CPI). In this phase of the study, two preliminary checklists were developed for obtaining prices and quality characteristics for Men's Dress Shirts and Men's Sports Jackets. These checklists were then used for data collection in the field on expanded CPI samples for the two items. To date, the resulting database for Men's Dress Shirts has been used to derive a hedonic model. The main conclusions that can be made at this point are: 1) checklists represent a certain improvement over the current method of reporting and should be developed for all clothing items in the CPI; 2) if the hedonic approach to quality adjustment in clothing is to be formally adopted then the CPI samples will have to be augmented, at least periodically to permit estimation; and 3) more experience is needed with the hedonic approach in research mode, using clothing items with more complexity, before we can say whether the hedonic approach should be formally adopted as an alternative to our current method of quality adjustment for clothing items.
Release date: 1999-05-13 - Articles and reports: 62F0014M1998012Geography: CanadaDescription:
This paper examines the methods of adjustment for quality change made in the Canadian Consumer Price Index for the period 1989 to 1994. It finds that in most cases the current Canadian practice ensures that the replacement of one commodity by another, one variety of a commodity by another, or one outlet by another, has no impact on the overall index. The main exceptions to this result occur when replacing varieties of commodities that are purchased only occasionally, and a judgement is made that the quality ratio between the old and new variety is not the same as the ratio of their prices. In these cases there is an impact on the index, up or down, depending on whether the change in price reported is higher or lower than the change in quality. From the experience of the CPI in these six years there has been a correlation between the price ratio of a variety and its replacement and the index movement that derives from the judgement. The direction and size of the impact on the index depends largely on whether an item is replaced with a higher or lower priced item. For these reasons, the paper argues that more attention should be paid to ensuring that the item selection is more representative of current sales than has traditionally been the case.
Release date: 1999-05-13 - 9. Comparative Study of Analytical Consumer Price Indexes for Different Subgroups of the Reference Population ArchivedArticles and reports: 62F0014M1998013Geography: CanadaDescription:
The reference population for the Consumer Price Index (CPI) has been represented, since the 1992 updating of the basket of goods and services, by families and unattached individuals living in private urban or rural households. The official CPI is a measure of the average percentage change over time in the cost of a fixed basket of goods and services purchased by Canadian consumers.
Because of the broadly defined target population of the CPI, the measure has been criticised for failing to reflect the inflationary experiences of certain socio-economic groups. This study examines this question for three sub-groups of the reference population of the CPI. It is an extension of earlier studies on the subject done at Statistics Canada.
In this document, analytical consumer price indexes sub-group indexes are compared to the analytical index for the whole population calculated at the national geographic level.
The findings tend to point to those of earlier Statistics Canada studies on sub-groups in the CPI reference population. Those studies have consistently concluded that a consumer price index established for a given sub-group does not differ substantially from the index for the whole reference population.
Release date: 1999-05-13 - Articles and reports: 63-016-X19980034329Geography: CanadaDescription:
Price inflation for Canadian consumers has thus far been much lower in the 1990s than in the previous two decades. This has especially been the case for the prices of consumer goods. In the 1990-97 period, the price index for consumer goods rose by just 16%. However, the 1990s inflation rate for consumer services was a markedly higher 26%.
Release date: 1999-01-15
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