A reworking of the basket could bolster confidence in a number that some say has little relationship with everyday life. The Bank of Canadawhen conducting survey research in 2020, a worry because skepticism about the way officials measure inflation could dent confidence in the central bank’s ability to keep inflation under control.
Now that Canada’s vaccination rates are among the highest in the world, normal activities are expected to resume over the summer, including travel. That means a CPI based on 2020 spending patterns could quickly become inaccurate if Canadian switch back to previous habits. But Statistics Canada has a plan for that.
Meanwhile, the CPI will now better mimic the surge in housing activity that occurred during the pandemic. The weight assigned to the shelter segment of the basket grew to 30 per cent from from 27 per cent in 2017. The weight for mortgage interest increased to 3.68 per cent from 3.3 per cent. Though major markets are showing signs of cooling off following a spring of frenzied activity, Ertl pointed out that the agency treats houses as assets, so real-estate values don’t influence the CPI directly. Instead, Statistics Canada calculates the costs associated with owning a home, such as mortgage insurance and what a household would have to pay to replace its current dwelling.
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