Prices Analytical Series
An Analysis of the 2026 Consumer Price Index Basket Update, Based on 2025 Expenditures

Introduction

The Consumer Price Index (CPI) is the most recognized and widely reported measure of price change in Canada, offering key insights into broader economic conditions within the country. It measures changes in consumer prices over time by comparing the cost of a fixed basket of goods and services. The methodology used to calculate the CPI follows accepted international standards (see International Monetary Fund - Consumer Price Index Manual, Concepts and Methods, 2020), and is subject to regular review, both internally and by external experts, and is adjusted to ensure it follows internationally recognized best practices.

Private and public pension programs, income tax deductions and some government social payments are adjusted using the CPI. The index is used as a deflator of various economic statistics to obtain estimates at constant prices, and as a tool for setting and monitoring economic policy. The CPI is also often used for indexation and contract escalation, in addition to being used as a gauge of economic health.

Each good or service in the CPI basket is assigned a weight that is proportional to its share of expenditures by Canadian households. The larger the basket weight, the more a price change of a given good or service will impact the headline CPI. For instance, Canadians, on average, spend a much larger share of their total expenditure on rent than on apples. As a result, a 10% increase in rent prices will have a greater impact on the all-items CPI than an equivalent increase in the price of apples.

The CPI is a Laspeyres-type^Note price index, meaning that basket quantities are fixed to the reference period of the basket weights, which are estimates of consumer expenditures used for upper-level aggregation. To ensure the CPI remains representative of the price change experienced by Canadians, the basket weights must reflect how Canadians are spending their money. A fixed-basket price index, such as the CPI, can only account for shifts in consumer spending when the basket weights are updated. Therefore, scheduling basket updates at regular intervals allows the CPI to capture changing expenditure patterns. For example, DVD players, DVD recorders and video cameras were removed in the 2022 basket update due to their small basket share, reflecting a notable decline in consumer spending. When cannabis was legalized in Canada, both medicinal and recreational cannabis were added in the 2017 basket update.

The May 2026 CPI, to be released on June 22, will mark the introduction of updated basket weights used in the calculation of the CPI. The 2026 basket update uses 2025 expenditures, replacing the 2024 expenditures which were introduced in June 2025 for reference month May 2025. The continuity of the CPI series is maintained by chain linking^Note the corresponding indices obtained from consecutive baskets. This is done separately for each aggregate series, which is defined as the intersection of a product and a geographic area.

Data sources

The updated basket weights were derived primarily using consumer expenditures from the 2025 national Household Final Consumption Expenditure (HFCE)^Note series, replacing those derived from the 2024 national HFCE series. Household expenditures reported in the Survey of Household Spending (SHS) continued to be used to supplement the HFCE expenditure data, mainly providing expenditure detail at lower levels of aggregation, including geographic aggregation.

Additional data sources were used to better inform expenditure weights for specific aggregates, or where HFCE or SHS data were unavailable. The use of retail scanner data was expanded with the 2025 basket and is now the primary data source for the food from stores component weights. The updated basket weights reflect the highest quality expenditure data available, while still meeting timeliness requirements. Examples of supplemental data sources include:

• Monthly Retail Trade Survey
• Office of the Superintendent of Financial Institutions
• Tourism performance indicators
• Inter-Urban Transit Survey
• Streaming and cable service usage reports
• Goods and Services Tax data
• Retail Commodity Survey
• Canada Mortgage and Housing Corporation
• Canadian Real Estate Association
• New Motor Vehicle Sales Survey
• Monthly Urban Transit Survey
• Tuition enrolment
• Petroleum statistics
• Census of Population

Composition of the CPI basket

The CPI classification of goods and services is organized in a layered, top-down structure (see diagram below). At the top of the structure is the all-items CPI, which contains eight major components. Below the eight major components are intermediate-level aggregates, such as meat and rented accommodation, which provide more detailed insight into the sources of monthly and annual price change. Below these are basic aggregates and elementary aggregates. Basic aggregates are the lowest level published series (or unpublished sibling indexes of published series) and elementary aggregates are the lowest level indexes for which basket weights are assigned. Most elementary aggregates are not published; however, some are also basic aggregates, which are not aggregated below the published level. Currently there are 220 basic aggregates and 491 elementary aggregates.

Description for Figure 1

The Consumer Price Index classification is organized according to a top-down hierarchical structure, depicted in a pyramid chart with five levels.

• At the first level, or the top of the pyramid, is the “All-items Consumer Price Index”.
• Below at the second level of the pyramid are the eight major components which are:
  • Food;
  • Shelter;
  • Household operations, furnishings and equipment;
  • Clothing and footwear;
  • Transportation;
  • Health and personal care;
  • Recreation, education and reading;
  • Alcohol beverages, tobacco products and recreational cannabis.
• At the third level of the pyramid there are “Intermediate level aggregates”.
• At the fourth level of the pyramid there are “220 basic aggregates”.
• At the fifth and lowest level of the pyramid there are “491 elementary aggregates”.

Source: Statistics Canada, Consumer Prices program.

In addition to the review of the expenditure weights, a basket update also provides an opportunity to review and update other aspects of the CPI. This includes changing the CPI classification to ensure it best reflects consumer spending and the evolving range of products and services available for purchase. Elementary aggregates are added or deleted from the basket as consumption patterns change over time. No changes were made to the aggregate classification structure of the basket; however, several elementary sample improvements were made, expanding the use of retail scanner data.

At the elementary aggregate level, the classification includes a sample of items that are chosen to characterize all products in that class. Representative products^Note are chosen with emphasis on items that are widely available and known to be among the most popular with consumers, ensuring that the items selected are representative of consumer purchases. The number of representative products assigned to an elementary aggregate can vary based on the basket weight of the aggregate, as well as the price variability and heterogeneity of products in that class. For instance, when pricing certain dry grocery products, such as pasta, representative products typically include both brand-name and store-brand items. In contrast, there is only one representative product priced under the bananas aggregate.

Table 2 in the appendix provides additional details on the CPI major components, including the basket weights, the number of elementary product classes and the total basket weight of the elementary aggregates that correspond to services.

Analysis of basket weights

Considerations

Expenditure share is a relative measure. Basket weight changes are a function of the expenditure growth within a given category, as well as the growth rate of all other expenditures in scope of the CPI. The basket share for a given good or service may either increase, decrease or remain unchanged from one period to the next, corresponding with the change in its proportion of overall expenditures. If spending in a specific category grows more slowly than overall spending, its share of the basket will likely decline despite higher spending than before. For example, although consumer spending on shelter increased in 2025, the shelter basket share decreased because spending in this category rose less than overall consumer spending.

Given that basket shares are rounded and published at the second decimal place, minor changes in expenditure share may not be apparent. Basket share changes of smaller magnitudes are accounted for in the CPI, as full precision^Note expenditure weights are used in its calculation.

Statistics Canada publishes two sets of basket weights for the CPI: weights at basket reference period prices and weights at basket link month prices. Weights at basket reference period prices are calculated for each reference period separately based on expenditure shares. Weights at basket link month prices are obtained by price-updating^Note the weights at basket reference period prices to obtain the hybrid expenditures expressed at prices of the link month.^Note The following analysis focuses on weights at basket reference period prices, as this best reflects the actual change in expenditure shares between basket reference periods.

Analysis of basket weights

Data table for Chart 1

Data table for chart 1
Table summary
The information is grouped by CPI major component (appearing as row headers), 2021, 2022, 2023, 2024 and 2025, calculated using percentage share of CPI basket units of measure (appearing as column headers).

CPI major component	2021	2022	2023	2024	2025
	percentage share of CPI basket
Note: Weights are expressed as proportions of total household consumption expenditures in scope of the CPI in the weight reference period dollars. Source: Statistics Canada, Table 18-10-0007-01 - Basket Weights of the Consumer Price Index.
Food	15.75	16.13	16.72	16.72	16.83
Shelter	29.67	28.22	28.57	29.12	28.51
Household operations, furnishings and equipment	14.84	14.57	13.46	13.28	13.16
Clothing and footwear	4.52	4.77	4.70	4.40	4.50
Transportation	16.16	16.94	16.78	17.29	17.87
Health and personal care	4.74	4.92	5.18	5.06	5.40
Recreation, education and reading	9.52	9.98	10.42	10.16	9.96
Alcoholic beverages, tobacco products and recreational cannabis	4.79	4.47	4.17	3.98	3.77

While expenditures increased for all eight major components, resulting basket shares rose in four major components. Changes in basket shares from 2024 to 2025 were relatively small, compared with the changes in weights during, and shortly following, the Covid-19 pandemic period.

The largest gain in basket share was in the transportation component, which increased from 17.29% in 2024 to 17.87% in 2025. Basket shares for health and personal care rose 34 basis points^Note to 5.40% in 2025 while those for food (16.83%) and clothing and footwear (4.50%) increased 11 and 10 basis points, respectively.

Despite higher expenditures, the basket share for shelter decreased from 29.12% in 2024 to 28.51% in 2025. Basket shares for recreation, education and reading (9.96%), and alcoholic beverages, tobacco products and cannabis (3.77%) both declined approximately 20 basis points in 2025 compared with 2024. The relative importance of household operations, furnishings and equipment in the 2025 CPI basket declined 12 basis points to 13.16%. This was the fifth consecutive decline for both the alcoholic beverages, tobacco products and cannabis and household operations, furnishings and equipment components.

Amid continued growth in automobile sales^Note , the transportation component took on greater importance in the CPI basket with this update, yet its share remained below pre-pandemic basket levels. The purchase of passenger vehicles index increased in weight from 6.23% in 2024 to 6.67% in 2025. The basket weight increased for both the purchase of new passenger vehicles (4.20%) and the purchase of used passenger vehicles (2.47%). Passenger vehicle insurance premiums had a larger basket share, up to 2.45% in 2025 from 2.03% in 2024. The growth was moderated by a lower basket share for gasoline in 2025 (3.30%) compared with 2024 (3.71%) as expenditures declined in 2025, due, in part, to the removal of the consumer carbon levy in April 2025.^Note

Expenditure shares for the health and personal care component increased from 5.06% in 2024 to 5.40% in 2025. The larger basket share resulted from gains in the health care component, rising from 2.51% in 2024 to 2.83% in 2025, with a higher proportion of spending being allocated to medicinal and pharmaceutical products.

The relative importance of food purchased in stores returned to its 2023 share (10.82%) in 2025 after a small decline to 10.75% in 2024. Basket shares increased for dairy products and eggs (1.70%) and other food products and non-alcoholic beverages (3.21%). Conversely, expenditure shares for meat declined for the fifth consecutive basket update, to 1.74% in 2025. Price-adjusted expenditures^Note declined for fresh or frozen beef in 2025 amid higher prices.^Note The basket weight for food purchased from restaurants rose slightly to 6.02% in 2025.^Note

Basket shares rose for clothing and footwear from 4.40% in 2024 to 4.50% in 2025. Consumers directed a slightly higher share of spending to clothing in 2025 (2.91%) compared with 2024 and the same share of spending towards footwear in both years (0.64%).

The basket weight for the shelter component decreased in 2025, mainly resulting from lower spending on mortgage interest costs in 2025 (5.23%) compared with 2024 (5.65%). The Bank of Canada cut the policy interest rate four times in 2025^Note , resulting in downward pressure on mortgage rates.^Note In addition, the removal of the consumer carbon levy on April 1st, 2025, lowered expenditures for natural gas, resulting in lower basket shares for the index. Offsetting these declines, expenditure shares for rent rose for the third consecutive year, increasing to 7.45% in 2025 from 7.19% in 2024.

Alcoholic beverages, tobacco products and recreational cannabis made up a smaller share of the 2025 CPI basket, continuing a downward trend in basket share observed since the beginning of the pandemic. Its basket share decreased from 3.98% in 2024 to 3.77% in 2025, coinciding with a decline in sales of alcohol.^Note The basket share for cigarettes fell for the fifth consecutive basket update to 0.75% in 2025.

Consumers directed a smaller share of spending towards recreation, education and reading, with a basket share of 10.16% in 2024 decreasing to 9.96% in 2025. This decline was concentrated in lower spending for travel tours, with the basket share falling 23 basis points to 1.01% in 2025, coinciding with fewer Canadian-resident trips abroad.^Note Partially offsetting the downward contribution of travel tours was a 7-basis point increase in the basket weight of traveller accommodation to 0.69% in 2025, as consumers travelled more domestically.

Conclusion

Statistics Canada continues to update and enhance the CPI to ensure it remains the highest quality measure of price change. The 2026 basket update using 2025 expenditures incorporates weight changes based on the most current and relevant expenditure data, ensuring the CPI remains as representative as possible of the price changes experienced by Canadians.

Statistics Canada continues to prioritize data accuracy, quality and timeliness. Working with price experts, other national statistical organizations and partners ensures that the data and methods used in the calculation of the CPI are aligned with international standards and best practices. The agency will continue to explore new potential sources of expenditure information for future basket updates and to adopt the most appropriate methods to keep the CPI relevant for Canadians.

Appendix