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Statscan sets plan to keep consumer price index relevant, accurate

Statistics Canada is collecting prices from shopping websites through an automated process and will turn to large Canadian retailers for point-of-sale transaction information to get a clearer picture of what Canadians buy.

Sean Kilpatrick/The Canadian Press

Statistics Canada officials were warned late last year that one of the country's most important economic indicators was at risk of losing its relevance and accuracy.

The red flag raised in November, 2015 about the consumer price index was part of a presentation that included details about the digital tools statistics workers are turning to in order to improve and upgrade their data.

To address the issue, the agency is collecting prices from shopping websites through an automated process and will turn to large Canadian retailers for point-of-sale transaction information – also known as scanner data – to get a clearer picture of what Canadians buy.

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There is also a push to get a better handle on energy prices, residential property prices and create an index specifically for seniors to better reflect the spending pattern and issues faced by older Canadians.

The monthly release of the CPI, which tracks inflation, is closely watched by governments, which use the indicator for fiscal decisions and ensuring that benefits keep up with the cost of living, as well as by the Bank of Canada in making monetary policy decisions.

However, rapidly changing technology and consumer habits have threatened to outpace the way Statistics Canada calculates the index, the latest version of which is due Friday.

"The way we track prices in the CPI at the moment, for the most part, is by visiting stores," said Richard Evans, director of the consumer prices division at Statistics Canada. "So we're definitely a domestic bricks-and-mortar operation for the most part.

"There is some Internet collection. We do buy large databases that give us the full scope of the transactions for certain component [indexes], but if we generalize, most of the CPI is still created by the different stores collecting prices in those stores."

Mr. Evans told senior managers late last year that without changes to the programs, the index was "at risk of falling behind in accuracy and relevance," according to a presentation obtained by The Canadian Press under the Access to Information Act.

In an April report provided to then-chief statistician Wayne Smith, senior managers said there was a public belief that the CPI didn't respond fast enough, compared with other, "big data" sources such as the Billion Prices Project at the Massachusetts Institute of Technology.

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The report says some of those measures represent Canada in OECD databases as opposed to figures from the national statistics agency.

The documents raise concerns that governments could use those big data sources to craft policy, believing it to be "the panacea for filling all data gaps."

"The complexity, accuracy and importance of robust statistical programs are not well understood by decision-makers and, as a result, non-official data is often thought to be a good substitute to official statistics," the April report says.

"As the economy becomes increasingly complex, the capacity of the statistical system to provide answers to emerging questions is pushed to the limit, further bringing the role of official statistics into question."

Mr. Evans said the index is accurate and the methods for calculating it meet or exceed international standards, but he doesn't want the agency to become complacent with the indicator.

"One of the parts of my jobs is to always be worried about what's coming and what might be possibly making the CPI irrelevant in the future, or less relevant. Every manager does that," Mr. Evans said.

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