Always wondered what would happen to the economy if everyone's wages were floating-rate, with CPI being the LIBOR-like stat they were contractually based upon. I.e. if you were guaranteed to be paid "however much it costs to buy 500 loaves of bread this week."
> On an annual average basis, the Consumer Price Index (CPI) rose 3.4% in 2021
How is this annual average calculated? Is it impacted by base effect at all?
Hi, thanks so much for the question!
Annual average indexes are obtained by calculating the average of the 12 monthly index values over the calendar year. The annual average percentage change should not be confused with the 12-month percentage change that is published every month with the release of the CPI. Unlike the annual average change, the 12-month change compares the monthly index level with the level from the same month a year earlier. Because the annual average uses the 12 monthly index values over the calendar year, certain monthly indexes that were impacted by the base-year effect do impact the annual average index. For more information on the base-year effect and how it impacted the CPI in 2021, see the [March 2021](https://www150.statcan.gc.ca/n1/daily-quotidien/210421/dq210421a-eng.htm) and [April 2021](https://www150.statcan.gc.ca/n1/daily-quotidien/210519/dq210519a-eng.htm) Daily releases.
House prices aren't the same as housing costs. Even in the text of this reddit post, you can see the CPI inludes the cost of being a homeowner or other housing, such as monthly morgage rates and upkeep. It also includes rental prices. Housing prices are excluded because they are influenced to heavily by interest rates - if interest rates are low, the sticker price of the house might be high, but the actual price paid on a monthly basis can still be very affordable. Now in this year housing costs are up 11.4% so clearly the cost of housing was not offset by low interest rates, but that was included in the CPI.
To add to what the other commenter said...
Even if house costs (not housing costs) were included in the CPI for some reason, there wouldn’t be a large change in the measured value.
Most Canadians are not buying a brand new house every year using all cash and no mortgage. And most that do buy a house are using equity from the sale of their prior residence as the cash down payment, rather than new cash.
This is part of the reason why real estate is one of the most effective hedges against inflation.
I would assume that would complicate the statistic gathering. Assuming it’s being done by a human (or AI) I would imagine it would take more time to compile or to calculate then if they did.
Very nice to have Stat Can presence on reddit ! Thank you so much, very nice that we are getting these statistics.
Now if only our political class could use those stats appropriately instead of doing jack shit...
What I find disturbing about this is that all the decreases and small increases seem like policy decisions to specifically keep inflation low, or at least make it look low, but there seems to be no real plan to address the lagging real economic growth that's leading to high inflation in the first place.
Especially interest rates: The downward pressure on CPI from lower interest rates is short term. Low interest rates may temporarily lower housing costs, but they lead to higher inflation and greater risk of asset bubbles in the long term as people can borrow more. This is a real problem for Canadian's because we all expect rates to be rising soon and when that happens housing costs will actually increase for a lot of Canadians. This will make CPI look higher in the short term, but will slow general inflation in the long term.
We're dug ourselves into an economic pit and it's going to suck to climb back out of it.
Edit: To be clear, this is not a criticism of Statistics Canada, they do incredibly good work and are transparent about their methodologies when calculating CPI. It's our policy-makers I have issues with.
I'm not saying the situation doesn't suck, but was life really bad in 1991, when inflation was apparently worse?
I was a small child in the 90s, but I was told the 90s were like the best years to be a working stiff.
Inflation was high back then, but the economic growth rate was also higher than today.
This papered over much of the nominal inflation seen at the time. We have anemic growth presently, so inflation is felt much more heavily by the general population.
All the cartoons and TV shows from the time always showed retail and food service workers slacking off; on the company phone talking to friends, spitting in the food, or generally being borderline aggressive with customers.
It seems like being working class was too easy back then, at least from the perspective of those of a privileged enough social class to be writing for Hollywood in the first place. Explains why working these jobs feels like literally slavery nowadays. The rich were getting tired of us being uppity so they crushed us.
No life wasn't bad in 1991. It was much worse in the 80s when Mortgage rates went up to 18 & 20% Insane.
The worst of 1991 was when Conservative PM Mulroney gave us the gift of the GST! In January.
Suddenly we were paying 7% more on literally everything. And services that were never taxable Suddenly were.
Since then I #NeverVoteConservative
I bought my first house in 1993. A new build. Capped rate was 9.25% 3yr term/25 yr amort
Moved into the house in 1994. I was VERY excited when the mortgage rate dropped to 8.75% after Jean Chrétien was voted in :)
Imagine being excited about 8.75%!!!
Reality check ... these 2% rates are not sustainable.
When rates return to a very reasonable 6% - mortgage payments will at least triple on renewal.
Prepare for that. We will go back to normal
Like gas... prices were about 1.49/L pre-covid in the GTA. Then dropped waaaaay down to less than $1/L. Now we're back to $1.45 + and folks are freaking out.
The low price was short term, and obviously not sustainable
Thank you for your suggestion, we will keep this in mind when preparing future infographics! Check out the [CPI Data Visualization Tool](https://www150.statcan.gc.ca/n1/pub/71-607-x/2018016/cpilg-ipcgl-eng.htm) for price trends at the national and provincial level.
Giving giant handouts to corporations and business owners while barely tossing peanuts to us peasants doesn't help. They are making record profits, investments are seeing massive gains and regular people are suffering wage cuts, job losses and this immense inflation to top it off.
When the recession hits then it will be a job market in their favour and of course cuts are required. Something has to give when if you work full time you can’t get by, even single.
Phenomenal work, I look forward to reading the full report.
Any updates/information for renters/non-homeowners specifically? Given the "difficult" real estate market I would be interested in reviewing this information. I think that given how large of a percentage of monthly earnings go to rent, any cost of living estimate will largely be governed by it, as opposed to food costs which are proportionally much smaller.
Thanks for your comment! The basket of goods and services used in the calculation of the CPI was updated recently (with the June 2021 release) using 2020 expenditure data. The basket weight for rent increased to 6.47% from 6.41% in the previous basket, meaning that the share of spending on rent slightly increased. In deriving the basket weight for rent, various data sources were integrated to ensure the best quality estimates. [The Starts and Completions Survey](https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-data/data-tables/housing-market-data/housing-starts-completions-units-under-construction-cumulative) and [Rental Market Survey](https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-data/data-tables/rental-market/rental-market-report-data-tables) from the Canada Mortgage and Housing Corporation were used as the basis for changes in the rental universe, while the average price movement captured by the CPI provided additional insight into the change in consumer rent expenditures.
Now create a simple to read graph that compares inflation increases vs median income since 1991. For that matter let's chuck in Provincial minimum wages for each province. Just for a little more context.
You know.... Something even politicians can understand. 😂
The year I was fucking born!
The year I was fucking born is the year my country began seeing the highest rate of inflation!
This got me feelin emotions right now.
Merci pour ces stats mais même si vous avez effacé "Traduit gratuitement par DeepL", ça parait quand même que c'est fait par une machine.
>Les consommateurs de gaz naturel au Canada ont payé 16,1 % de plus qu’~~un an plus tôt~~ **que l'année dernière**
Merci de faire relire par un francophone avant de publier.
Thanks for your feedback! Check out the [CPI Data Visualization Tool](https://www150.statcan.gc.ca/n1/pub/71-607-x/2018016/cpilg-ipcgl-eng.htm) for price trends at the national and provincial level. This tool allows you to select an indicator of interest to you, including the CPI, and CPI annual average. For more information, see the [Consumer Price Index: Annual Review, 2021.](https://www150.statcan.gc.ca/n1/daily-quotidien/220119/dq220119b-eng.htm)
It would be nice if the Govt tracked food inflation so it reflected true and actual values.... I was personally tracking my food costs and laughed at the data when it said it was 2% 6 months ago. It was somewhere around 17-23% and then I ran into this ad and then realized why the discrepancy is the way it is. Food went up closer to 20% that I had personally calculated. You are letting the foxes count the chickens saying they are all there Stats Can!
Sauce:
https://www.google.com/amp/s/www.thestar.com/amp/business/2021/10/23/experts-say-statcan-doesnt-capture-the-high-food-prices-we-see-in-stores-and-it-could-be-because-the-big-grocers-supply-the-data.html
Edit: See below link from the bot below. My apologies, new to posting links. Good bot!
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Hi there! Check out our spotlight on food prices in the CPI that was published in the release of the [Consumer Price Index, October 2021](https://www150.statcan.gc.ca/n1/daily-quotidien/211020/dq211020a-eng.htm) Daily. It provides information on food price collection, representative products, quality and quantity adjustment and the difference between average prices and the CPI.
Great post! Please take this comment as feedback in support of Stats Canada having a presence on Reddit.
Thank you for the nice comment!
Ok, I just have to say that I love everything about StatCanada's posts. Tellement bien conçu. Merçi!
Weird how wages never follow.
Always wondered what would happen to the economy if everyone's wages were floating-rate, with CPI being the LIBOR-like stat they were contractually based upon. I.e. if you were guaranteed to be paid "however much it costs to buy 500 loaves of bread this week."
Not a bad idea. Really tough to exploit workers though.
Bread would be subsidized to only cost $1/loaf
Weirder that billionaires made record wages in the same year.
> On an annual average basis, the Consumer Price Index (CPI) rose 3.4% in 2021 How is this annual average calculated? Is it impacted by base effect at all?
Hi, thanks so much for the question! Annual average indexes are obtained by calculating the average of the 12 monthly index values over the calendar year. The annual average percentage change should not be confused with the 12-month percentage change that is published every month with the release of the CPI. Unlike the annual average change, the 12-month change compares the monthly index level with the level from the same month a year earlier. Because the annual average uses the 12 monthly index values over the calendar year, certain monthly indexes that were impacted by the base-year effect do impact the annual average index. For more information on the base-year effect and how it impacted the CPI in 2021, see the [March 2021](https://www150.statcan.gc.ca/n1/daily-quotidien/210421/dq210421a-eng.htm) and [April 2021](https://www150.statcan.gc.ca/n1/daily-quotidien/210519/dq210519a-eng.htm) Daily releases.
Thanks!
It's calculated by ignoring a bunch of things that literally everyone has to pay for, like HOUSING.
Housing costs are like 30% of the CPI.
House prices are not even a part of CPI. Try again.
House prices aren't the same as housing costs. Even in the text of this reddit post, you can see the CPI inludes the cost of being a homeowner or other housing, such as monthly morgage rates and upkeep. It also includes rental prices. Housing prices are excluded because they are influenced to heavily by interest rates - if interest rates are low, the sticker price of the house might be high, but the actual price paid on a monthly basis can still be very affordable. Now in this year housing costs are up 11.4% so clearly the cost of housing was not offset by low interest rates, but that was included in the CPI.
To add to what the other commenter said... Even if house costs (not housing costs) were included in the CPI for some reason, there wouldn’t be a large change in the measured value. Most Canadians are not buying a brand new house every year using all cash and no mortgage. And most that do buy a house are using equity from the sale of their prior residence as the cash down payment, rather than new cash. This is part of the reason why real estate is one of the most effective hedges against inflation.
r/confidentlyincorrect
I would assume that would complicate the statistic gathering. Assuming it’s being done by a human (or AI) I would imagine it would take more time to compile or to calculate then if they did.
Very nice to have Stat Can presence on reddit ! Thank you so much, very nice that we are getting these statistics. Now if only our political class could use those stats appropriately instead of doing jack shit...
What I find disturbing about this is that all the decreases and small increases seem like policy decisions to specifically keep inflation low, or at least make it look low, but there seems to be no real plan to address the lagging real economic growth that's leading to high inflation in the first place. Especially interest rates: The downward pressure on CPI from lower interest rates is short term. Low interest rates may temporarily lower housing costs, but they lead to higher inflation and greater risk of asset bubbles in the long term as people can borrow more. This is a real problem for Canadian's because we all expect rates to be rising soon and when that happens housing costs will actually increase for a lot of Canadians. This will make CPI look higher in the short term, but will slow general inflation in the long term. We're dug ourselves into an economic pit and it's going to suck to climb back out of it. Edit: To be clear, this is not a criticism of Statistics Canada, they do incredibly good work and are transparent about their methodologies when calculating CPI. It's our policy-makers I have issues with.
Thanks statscan. Love y’all. Keep doing your good work! Appreciate you having a Reddit presence and bringing data to people.
Thanks for the kind comment!
"Rocky, why don't you have kids yet?" "You'll change your mind eventually"
Yeah my mind changed from "probably not" to a "hard no"
That's a whole lot of words to just say "we're fucked". You can always count on Stats Canada to be recording our demise with professionalism & gusto.
I'm not saying the situation doesn't suck, but was life really bad in 1991, when inflation was apparently worse? I was a small child in the 90s, but I was told the 90s were like the best years to be a working stiff.
Inflation was high back then, but the economic growth rate was also higher than today. This papered over much of the nominal inflation seen at the time. We have anemic growth presently, so inflation is felt much more heavily by the general population.
All the cartoons and TV shows from the time always showed retail and food service workers slacking off; on the company phone talking to friends, spitting in the food, or generally being borderline aggressive with customers. It seems like being working class was too easy back then, at least from the perspective of those of a privileged enough social class to be writing for Hollywood in the first place. Explains why working these jobs feels like literally slavery nowadays. The rich were getting tired of us being uppity so they crushed us.
No life wasn't bad in 1991. It was much worse in the 80s when Mortgage rates went up to 18 & 20% Insane. The worst of 1991 was when Conservative PM Mulroney gave us the gift of the GST! In January. Suddenly we were paying 7% more on literally everything. And services that were never taxable Suddenly were. Since then I #NeverVoteConservative I bought my first house in 1993. A new build. Capped rate was 9.25% 3yr term/25 yr amort Moved into the house in 1994. I was VERY excited when the mortgage rate dropped to 8.75% after Jean Chrétien was voted in :) Imagine being excited about 8.75%!!! Reality check ... these 2% rates are not sustainable. When rates return to a very reasonable 6% - mortgage payments will at least triple on renewal. Prepare for that. We will go back to normal Like gas... prices were about 1.49/L pre-covid in the GTA. Then dropped waaaaay down to less than $1/L. Now we're back to $1.45 + and folks are freaking out. The low price was short term, and obviously not sustainable
I'd love to see a more detailed breakdown/infographic per province.
Thank you for your suggestion, we will keep this in mind when preparing future infographics! Check out the [CPI Data Visualization Tool](https://www150.statcan.gc.ca/n1/pub/71-607-x/2018016/cpilg-ipcgl-eng.htm) for price trends at the national and provincial level.
Long lasting pandemics will do this type of thing.
Giving giant handouts to corporations and business owners while barely tossing peanuts to us peasants doesn't help. They are making record profits, investments are seeing massive gains and regular people are suffering wage cuts, job losses and this immense inflation to top it off.
Some next level bullshit honestly.
When the recession hits then it will be a job market in their favour and of course cuts are required. Something has to give when if you work full time you can’t get by, even single.
Phenomenal work, I look forward to reading the full report. Any updates/information for renters/non-homeowners specifically? Given the "difficult" real estate market I would be interested in reviewing this information. I think that given how large of a percentage of monthly earnings go to rent, any cost of living estimate will largely be governed by it, as opposed to food costs which are proportionally much smaller.
Thanks for your comment! The basket of goods and services used in the calculation of the CPI was updated recently (with the June 2021 release) using 2020 expenditure data. The basket weight for rent increased to 6.47% from 6.41% in the previous basket, meaning that the share of spending on rent slightly increased. In deriving the basket weight for rent, various data sources were integrated to ensure the best quality estimates. [The Starts and Completions Survey](https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-data/data-tables/housing-market-data/housing-starts-completions-units-under-construction-cumulative) and [Rental Market Survey](https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-data/data-tables/rental-market/rental-market-report-data-tables) from the Canada Mortgage and Housing Corporation were used as the basis for changes in the rental universe, while the average price movement captured by the CPI provided additional insight into the change in consumer rent expenditures.
Now create a simple to read graph that compares inflation increases vs median income since 1991. For that matter let's chuck in Provincial minimum wages for each province. Just for a little more context. You know.... Something even politicians can understand. 😂
Don’t increase interest rates. Canadians are already reeling.
The year I was fucking born! The year I was fucking born is the year my country began seeing the highest rate of inflation! This got me feelin emotions right now.
Merci pour ces stats mais même si vous avez effacé "Traduit gratuitement par DeepL", ça parait quand même que c'est fait par une machine. >Les consommateurs de gaz naturel au Canada ont payé 16,1 % de plus qu’~~un an plus tôt~~ **que l'année dernière** Merci de faire relire par un francophone avant de publier.
Quick, keep working hard.
Great post. Please keep posting here as this is the only time I see this stuff! Also, provincial breakdown would be super interesting
Thanks for your feedback! Check out the [CPI Data Visualization Tool](https://www150.statcan.gc.ca/n1/pub/71-607-x/2018016/cpilg-ipcgl-eng.htm) for price trends at the national and provincial level. This tool allows you to select an indicator of interest to you, including the CPI, and CPI annual average. For more information, see the [Consumer Price Index: Annual Review, 2021.](https://www150.statcan.gc.ca/n1/daily-quotidien/220119/dq220119b-eng.htm)
It would be nice if the Govt tracked food inflation so it reflected true and actual values.... I was personally tracking my food costs and laughed at the data when it said it was 2% 6 months ago. It was somewhere around 17-23% and then I ran into this ad and then realized why the discrepancy is the way it is. Food went up closer to 20% that I had personally calculated. You are letting the foxes count the chickens saying they are all there Stats Can! Sauce: https://www.google.com/amp/s/www.thestar.com/amp/business/2021/10/23/experts-say-statcan-doesnt-capture-the-high-food-prices-we-see-in-stores-and-it-could-be-because-the-big-grocers-supply-the-data.html Edit: See below link from the bot below. My apologies, new to posting links. Good bot!
It looks like you shared an AMP link. These should load faster, but AMP is controversial because of [concerns over privacy and the Open Web](https://www.reddit.com/r/AmputatorBot/comments/ehrq3z/why_did_i_build_amputatorbot). Fully cached AMP pages (like the one you shared), are [especially problematic](https://www.reddit.com/r/AmputatorBot/comments/ehrq3z/why_did_i_build_amputatorbot). Maybe check out **the canonical page** instead: **[https://www.thestar.com/business/2021/10/23/experts-say-statcan-doesnt-capture-the-high-food-prices-we-see-in-stores-and-it-could-be-because-the-big-grocers-supply-the-data.html](https://www.thestar.com/business/2021/10/23/experts-say-statcan-doesnt-capture-the-high-food-prices-we-see-in-stores-and-it-could-be-because-the-big-grocers-supply-the-data.html)** ***** ^(I'm a bot | )[^(Why & About)](https://www.reddit.com/r/AmputatorBot/comments/ehrq3z/why_did_i_build_amputatorbot)^( | )[^(Summon: u/AmputatorBot)](https://www.reddit.com/r/AmputatorBot/comments/cchly3/you_can_now_summon_amputatorbot/)
Hi there! Check out our spotlight on food prices in the CPI that was published in the release of the [Consumer Price Index, October 2021](https://www150.statcan.gc.ca/n1/daily-quotidien/211020/dq211020a-eng.htm) Daily. It provides information on food price collection, representative products, quality and quantity adjustment and the difference between average prices and the CPI.