What is the CPI and how does it impact Canadians?
The Consumer Price Index (CPI) is one of the most widely used measures of inflation. Produced by Statistics Canada (StatCan), the CPI compares the price of a fixed basket of goods and services — about 700 or so — Canadians typically buy. The goods and services included in the CPI are divided into eight major components:
Food — groceries and restaurant meals
Shelter — mortgage payments, rent, insurance, maintenance and property taxes
Household operations, furnishings and equipment — phone, internet, child care, cleaning supplies, furniture and appliances
Clothing and footwear — dry cleaning, shoes, clothes
Transportation — vehicles, fuel, car insurance, public transit
Health and personal care — prescriptions, dental care, eye care, hair cuts
Recreation, education and reading — sports, travel, books, educational courses
Alcoholic beverages, tobacco products and recreational cannabis
Each item in the basket is assigned a weight representing the proportion Canadians typically spend on specific goods and services. For example, Canadians spend more on gasoline than milk, therefore, gasoline gets a larger weight than milk. StatCan calculates the cost of the basket of goods every month and compares the month-to-month changes. The percentage difference in the CPI is the inflation rate. Watch this video explainer of the CPI produced by StatCan to learn more.
In October 2024, the CPI rose by 2% year-over-year, up from 1.6% in September. Five of the eight major components — food; shelter; transportation; health and personal care; and alcoholic beverages, tobacco products and recreational cannabis — saw price increases.
StatCan releases CPI data on a monthly basis for most recently completed month. For example, the October 2024 CPI figures were released on November 19. The November CPI figures are expected to be released on December 17, 2024. If you’re interested in tracking the CPI data, the table below includes the upcoming release dates shared by StatCan. The Bank of Canada also updates its inflation charts when new data are made available.
How has the CPI changed?
From the early 2000s to the mid-2010s, Canada's inflation was stable, hovering around the 2 percent target set by the Bank of Canada. During the 2008 financial crisis, inflation fell briefly before stabilizing. The COVID-19 pandemic initially lowered inflation due to decreased consumer demand, but supply chain issues later caused a sharp rise. In June 2022, inflation spiked to 8%, the highest in 25 years, mainly due to rising energy costs, supply chain problems, and strong consumer demand as the economy reopened. By late 2023, inflation started to return to its historical average.
Who uses the CPI data?
Employers use the CPI to adjust salaries and governments use it to adjust payments to pension and Old Age Security and adjust taxes to reflect the changes in purchasing power. Governments and businesses also use the CPI to evaluate the health of the economy and to devise fiscal policies. The Bank of Canada uses the CPI to inform its monetary policies and determine the appropriate interest rates (raise, cut, or leave as is) to achieve the targeted inflation rate of 2% that has been in place since 1991.
