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June 18, 2024CONSUMER PRICE INDEX 2024 BASKET UPDATE BACKGROUND
Statistics Canada has released their regular update for Consumer Price Index (CPI) basket weights and composition, available here. The updated basket weights will be used with the release of May 2024 CPI on June 25, 2024.
CPI basket quantities are fixed to the reference period of the basket weights which are used to estimate consumer expenditures for the upper-level aggregation. Larger weights represent a large share of expenditures on the category and the more a price change will impact headline CPI. For 2023, the expenditure weights are derived from Household Final Consumption Expenditures, the Survey of Household Spending and alternative sources to account for shifts in spending. Updating the basket is needed as expenditure patterns shift in response to prices, income levels, demographics, habits and new technology/products.
Each good or service in the basket is assigned a basket share proportional to consumption expenditure for which they account. The CPI classification of goods and services is organized according to a top-down hierarchical structure from the eight major components, 220 basic aggregates and 478 elementary aggregates, most of which are unpublished. These elementary aggregates are added or deleted as consumption pattern changes. At the elementary aggregate level, the classification includes sample of items that characterize all products in the class. Representative products are chosen for items that are widely available and known to be among the most popular with consumers.
Changes for the 2024 update include making some elementary aggregates into basic aggregates to provide more granular data. These include different cuts of fresh or frozen beef, pork, and chicken. As ridesharing became available in more locations, including Nova Scotia and Prince Edward Island, basket weights have been added for this service. Various elementary aggregates under the audio equipment index were streamlined to reduce unnecessary detail at the lowest levels of aggregation, with no changes to the goods and services priced under this series.
2024 WEIGHTS
Among the eight major components of the CPI basket, Nova Scotia has the second lowest basket share for food at 16.49%. Nationally the share is 16.69% with the highest share in Prince Edward Island and the lowest in Ontario.
Shelter represented the largest share of the CPI basket across the country. Nova Scotia's CPI basket share is 25.81%, lower than the national average. British Columbia and Ontario had notably higher shares of shelter expenditures. The lowest basket share was in Newfoundland and Labrador.
Nova Scotia's CPI basket share for household operations and furnishings was below the national average at 12.73%. Prince Edward Island had the highest share of expenditures in this component of CPI.
Nova Scotia's CPI basket share for clothing and footwear is lowest among provinces. Quebec had the highest basket share in 2023.
Transportation reflects 18.07% of expenditures in the CPI basket in Nova Scotia, higher than the national average in 2023. The lowest basket share for transportation was in British Columbia and the highest was in Newfoundland and Labrador.
Nova Scotia's basket share for health and personal care was the highest among provinces at 6.36% in 2023. British Columbia reported the lowest basket share for this component in 2023.
Nova Scotia had the second highest basket share for recreation, education and reading among provinces, led by Manitoba. Newfoundland and Labrador had the lowest expenditure share for this component in their 2023 CPI basket.
Alcoholic beverages, tobacco products and recreational cannabis typically represent the smallest share of the CPI basket in a given province (exception: Newfoundland and Labrador, second lowest to health/personal). In 2023, 5.5% of the CPI basket in Nova Scotia was for expenditures in this component, higher than the national average. Ontario had the lowest basket share in this component among provinces.
The Atlantic provinces have higher basket shares for energy products than other provinces. In 2023, 10.09% of the CPI basket in Nova Scotia was for energy expenditures. Nationally, this was 7.01% in 2023.
Nova Scotia had higher basket shares for food purchased from stores and a smaller share of food purchased from restaurants compared to the national average.
Basket shares for the shelter component of CPI are lower in Nova Scotia compared to the national average (exception: maintenance and repairs and electricity). Fuel oil and other furls basket share was notably higher in Nova Scotia compared to the national average.
Household operations had lower basket shares in Nova Scotia for most components compared to the national average except for telephone services, paper/plastic/aluminum supplies, appliances and small kitchen appliances and utensils.
Clothing and footwear reflected a lower basket share in Nova Scotia compared to Canada except for accessories/watches/jewellery.
Transportation had higher basket shares for purchase and leasing of passenger vehicles, gasoline, parts/maintenance and repairs and inter-city transportation.
Health and personal care basket shares were higher in Nova Scotia for all sub-components except personal care services.
Among recreation, education and reading, Nova Scotia's CPI basket shares were typically higher than the national average except for recreation equipment/services and home entertainment.
Beer and liquor purchased from stores and cigarettes reflected larger shares of the Nova Scotia CPI basket for 2023 compared to the national average. Wine purchased from stores and alcohol served in bars/restaurants had smaller CPI basket shares in Nova Scotia compared to the national average.
Sources:
Statistics Canada. An Analysis of the 2024 Consumer Price Index Basket Update, Based on 2023 Expenditures
Statistics Canada. Table 18-10-0007-01 Basket weights of the Consumer Price Index, Canada, provinces, Whitehorse, Yellowknife and Iqaluit
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