Understanding Consumer Price Index

Statistics Canada produces the consumer price index (CPI), as a monthly measure of the rate of inflation.

The CPI “basket” includes about 600 goods and services that most Canadians would purchase, including food, housing, transportation, furniture, clothing and recreation. The basket is updated as consumers’ habits change.

When the Bank of Canada is considering its policies, it uses the “core CPI”, which excludes the eight most volatile items in the basket, which are fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation and tobacco products.

The “basket” is not intended to reflect specific households or accurately reflect the impact of inflation on every household during a specific period. For instance, an increase in the cost of men’s clothing, which took place recently, wouldn’t affect households without men.

HOOPP’s annual cost of living adjustment (COLA) is based upon the December to December increase in the previous year’s CPI.

For more information on CPI, please visit Statistics Canada.