Except translation, this story has not been edited by achinews staff and is published from a syndicated feed.
Whenever you pass through the cash register at a grocery store, the price of everything in your shopping cart – from discount chicken to strawberries on sale – is collected by the retailer and sent to Statistics Canada.
That’s just one of several ways the data agency tracks the spending reflected in its consumer price index, or CPI: Canada’s most comprehensive measure of inflation.
CPI is divided into eight categories – called “baskets” – meant to show the average cost of a group of goods and services. There is a food basket, a transport basket and a shelter basket, among others.
Taken together, these baskets make up the overall CPI number, or so-called headline number that you see in our reports each month. But each has a different “weight” in the overall CPI, depending on how much Canadians spend on one basket compared to the others.
Each year, Statistics Canada conducts a review of those categories. After this year’s change, food will now be a bigger part of that overall figure, because Canadians devoted more of their budgets to food bought in stores and in restaurants in 2023 than they did in the previous year.
Here’s what you need to know about the changes, and how they affect headline inflation.
Why do we analyze inflation by basket?
Statistics Canada regularly reviews basket weights to ensure they reflect how much Canadians spend on goods and services.
“It’s something we do every year. And the fact that we do it every year is actually beneficial to Canadians because that means the CPI is based on the most current Canadian spending patterns,” said Rebecca Lehto, Statistics Canada’s consumer price analyst.
Because Canadians spent more on food and eating out in 2023, the weight of the food basket increased (for the second year in a row) from 16.13 per cent of total inflation in 2022 to 16.72 per cent in 2023.
Food from grocery stores now accounts for 10.82 per cent of the overall CPI, while food from restaurants has increased to 5.90 per cent of that figure, according to Statistics Canada.
The baskets for shelter and health and personal care also increased, while others – such as those for transport, or alcoholic beverages, tobacco products and recreational cannabis – declined in importance.
“This year, we saw food pressures rise and that was essentially because more people were spending in restaurants again without COVID restrictions or capacity restrictions. And it’s also coming from the grocery side,” because prices have increased significantly, Lehto said.
What does that mean for inflation numbers?
Each basket has a varying effect on the overall CPI figure. More generally, items such as food or gas are sometimes excluded from inflation measures because their prices can be volatile.
“For example, a five percent change in gas prices will affect the whole item [consumer price index] a change of more than five percent in milk prices,” because Canadians direct more spending toward gas than they do milk, Lehto said.
“Going forward, larger increases in food will have a greater impact on the CPI of each item.”
That starts with the May numbers, which will be released on Tuesday morning.
How did the COVID-19 pandemic change price stability?
Adjusting the baskets was especially important during the pandemic when “spending patterns were shifting suddenly and intensely,” Lehto said. While Statistics Canada updates the baskets every year now, before the pandemic, it did so every two years.
The changing basket weights are also an important indicator of history, because they show where Canadians have had to set aside more money in a given year, explained William Huggins, a professor of finance and business economics at McMaster University.
“The weight changes in response to the data that has already passed. So when we see that increase in food weight, that is in response to the fact that in 2023 we spent more than we did on food than in 2022,” he said.
That became particularly relevant during the pandemic, when restaurants closed and people stopped eating out. People also stopped travelling, which in turn affected the transport basket.
“You see all these wild swings in the CPI basket really as a diagnostic of how people were changing their lifestyles,” Huggins said.
Will I feel these changes at the grocery store?
The updated baskets “will still be a measure of how a bundle of food prices has changed in the last month and is nothing more than that. It’s a measure of average affordability,” said Michael von Massow, a food economist at the University of Guelph.
“The impact on the ground or in the food aisle, if you will, is not significantly different…. It gives us an idea of what to expect.
“If you really want to see what applies to you as an individual, you could go and look at the table and say, ‘Oh, I eat more chicken than beef, and fresh chicken. [is] up less than beef in the last year.”
Take the inflation numbers released last month. Food inflation grew at a slower rate of 1.4 per cent annually in April compared to the same time last year, when the growth rate was 9.1 per cent.
Those numbers won’t be feel is correct for everyone – because we all have different food lists, says von Massow.
“[The basket] reflects changes in demand and it also reflects changes in relative prices.”
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