Bagels, bacon, and communications services

Last week, Rob Carrick had an article in the Globe and Mail entitled “Inflation, as tracked in bagels, bacon and pints of beer”.

In it, he talks about different measures of inflation sent in by readers, and notes that the rate of inflation has been rising, from 1% year-over-year at the start of the year to a rate of 3.6% in May.

His article includes a link to a personal inflation rate calculator from Statistics Canada.

When you calculate your personal inflation rate, be grateful for the communications component. I found it interesting to see that communications show a negative inflation rate; prices are 7.2% lower year over year.

For more than a year now, each month I have been tracking a Cellular Consumer Price Index, released coincidentally with the monthly Consumer Price Index (CPI) from Statistics Canada. It shows cellular prices have dropped 17% between May 2020 and May 2021. Since January 2019, the Cell CPI is down nearly 28%.

That merits repeating: Statistics Canada data shows the Cellular Consumer Price Index is 28% lower than it was in January 2019.

Bacon isn’t a component of my personal monthly spending basket, but bagels, beer and communications services are.

Statistics Canada usually updates its baskets every two years to reflect changing spending patterns using Canadian household expenditure data. Last month, the agency announced “As a result of the unexpected and profound changes in consumption habits because of the pandemic, the basket weight update, planned for February 2021, was delayed. This delay has allowed the impact of COVID-19 on consumer spending behaviours to be better understood”.

The new weightings show a 15% drop in the communications weightings, from 3.55% in 2017 to 3.03% in 2020. Telephone services, which include cellular services, is responsible for all of that, falling more than 25% from 2.39% to 1.77%. Internet services have held steady, shifting marginally from 1.06% to 1.07%. At 4.86%, the “alcohol, tobacco and cannabis” category is now weighted more than 60% higher than communications in the price index weightings based on Canadian consumer spending.

The June 2021 CPI figures will be released July 28, and will use the latest weightings and 2020 reference period.

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