Canada retools inflation baskets, more focus on food, gas prices
A person shops in the beverage aisle at a grocery store in Toronto, Ontario, Canada November 22, 2022. REUTERS/Carlos Osorio/File photo
OTTAWA – Canada‘s national statistics agency on Tuesday revealed new weights for the basket of goods and services in its Consumer Price Index, giving more prominence to changes in the prices of food and gasoline.
The reweighting, which Statistics Canada carries out every year, has historically had only a marginal impact on the headline number. The new basket weights will be applied to May’s inflation data, due out on June 27.
The rebalancing reflects changes in 2022 compared to 2021. Statscan said the alterations were designed to take into account the continuing recovery from the impact of COVID-19.
“Spending that began to gradually shift back towards pre-pandemic patterns in 2021 continued and were more pronounced in 2022, with several sectors inching closer to pre-pandemic basket weight shares,” it said.
COVID-related measures and disruptions to supply chains helped push Canadian inflation up to a near-40 year high of 8.1 percent in June last year. It has now dropped to 4.4 percent, still more than double the Bank of Canada‘s 2 percent target.
Gasoline prices, pushed higher by increased demand as well as Russia’s invasion of Ukraine, will now account for 4.27 percent of overall inflation, up from 3.47 percent.
Gasoline is part of the larger transportation component which, for the second consecutive year, increased the most among the major eight segments, rising to 16.94 percent from 16.16 percent.
The food component expanded to 16.13 percent from 15.75 percent, reflecting increases in sales at restaurants as lockdown measures were removed.
But the shelter component dropped to 28.22 percent from 29.67 percent, in part due to lower costs for rent and other accommodation expenses as the housing market cooled.
DVD players were removed from the 2023 basket as they have become less popular with consumers following the advent of streaming services. Conversely, charcoal barbecues and snow removal equipment were added.
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