Statistics Canada Announces New Weights for Goods and Services in the Consumer Price Index

On Wednesday (7-21-21), Statistics Canada (StatsCan) revealed new weights for the basket of goods and services in the Canadian Consumer Price Index (CPI), with shifts including a higher weighting for the shelter component as housing prices soar. The previous basket update was based on 2017 purchasing patterns. The CPI provides insight on inflation and is sometimes used to help determine wage increases. It also has implications for real return bonds, which compensate investors for changes in the index. Three of the eight major components saw unprecedented growth in their basket weights, StatsCan said, led by shelter, already the highest-weighted major component, which grew to 29.78% as a share of the basket from 26.92% in 2017. While 4 of the major components declined in basket share, the transportation component shrinking the most. It fell to 15.34% from 19.72%. The updated basket weights represent consumer spending patterns in 2020, during the coronavirus pandemic, and will be incorporated into June 2021 CPI, StatsCan said.