The Canadian Consumer Price Index and the bias issue: Present and future outlooks
Articles and reports: 62F0014M19970103362Description: The debate on the measurement of bias in the CPI has been around for decades. However, given the size of government budgetary deficits, the issue of overestimating inflation and therefore payments in social benefits has triggered the interest in the measurement of the CPI bias. The final report of the U.S. Advisory Commission to Study the Consumer Price Index, chaired by Michael Boskin, states that the U.S. CPI has been overestimated by 1.1% per year since 1996. Following the release of the report, many interested groups have asked the question as to the magnitude of the bias for Canada's CPI. This result raised the question whether the bias in the Canadian CPI was of the same magnitude. This paper begins by presenting the bias issue in the context of the Canadian CPI and then outlines some of the plans Statistics Canada intends to undertake in the near future to improve the measurement of the CPI. The paper concludes that, although the Canadian CPI may suffer from the same potential problems as the U.S. CPI, the overall effect of these biases is less notable because Statistics Canada started to apply an appropriate methodology earlier. In fact, in recent studies Crawford (1993 and 1997) tried to estimate an overall bias and concluded that given the generous judgement incorporated in the estimate, it is likely that the bias is, on average smaller than 0.5%.Issue Number: 1997010Frequency: UnknownAuthor(s): Ducharme, Louis-MarcMain Product:Prices Analytical Series
