As of June, the agency now includes used vehicle prices in the consumer price index (CPI), which it uses to calculate inflation. Previously, Statistics Canada used new vehicle prices as a proxy for used vehicle prices when calculating the private transportation portion of the CPI.
Taylor Mitchell, Statistics Canada's senior CPI analyst, explained the agency used this method because, while new vehicles tend to be more expensive than used, price changes in both categories typically mirror one another, rising and falling at approximately the same rate.
Since the CPI doesn't measure the actual cost of things, but rather the rate of price change, this method worked as long as price changes in new and used cars were aligned.
Moshe Lander, an economist with Montreal's Concordia University, believes Statistics Canada made the right choice in updating the CPI, based on how the pandemic has affected consumer behavior.
The CPI basket change is permanent, meaning Statistics Canada now has a mechanism for measuring used car price increases separately from new car increases, should new and used car price changes diverge again in the future. In the meantime, Lander believes the current gap between new and used vehicle inflation will start to correct itself eventually.
Reference:
DeLaire, M. (2022, July 14). Statistics Canada begins tracking used car inflation as prices rise. Retrieved from https://www.ctvnews.ca/canada/statistics-canada-begins-tracking-used-car-inflation-as-prices-rise-1.5988245?autoPlay=true
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