April 20, 2024
Senior Policy Advisor. Canadian Economic Analysis, Bank of Canada
Patrick Sabourin
Senior Economist. Consumer Prices Division, Statistics Canada
Faouzi Tarkhani
Due to a technical error, the video is not available. Here are the slides and a link to the paper.
Exploring Various Approaches to Measuring OA in the CPI 20240419 – webinar slides
Here is a link to the paper on the Statcan web site.
Abstract:
The Canadian CPI measures the change in the cost of a fixed basket of goods and services typically purchased by Canadians. These include shelter (housing services), an important element of consumer spending. Owned accommodation (OA) accounts for more than half of these expenditures.
There are several approaches for the treatment of OA in the CPI. The rental equivalence approach gauges the cost of homeownership as if owners were renting their properties to themselves. The user cost approach considers the perceived costs of owning a home, while the payment approach assesses actual housing expenses. The (net) acquisition approach treats an owner-occupied dwelling like any other CPI household durable good, measuring the cost paid by a household to acquire a house (including or excluding the land). Finally, one approach excludes OA in the CPI as it considers OA as a pure asset and therefore excludes from the CPI any effect of price change related to the purchase and use of an OA.
In addition, the treatment of OA is an integral part of the discussion on how to explain the gap between perceived inflation (measured by the Bank of Canada’s Canadian Survey of Consumer Expectations) and measured inflation. The difference between the price of a house (or how much it costs to buy a house) and the cost of owning a house can be a source of confusion that affects consumers’ perception of inflation, potentially widening the inflation perception–measurement gap.
Senior Policy Advisor. Canadian Economic Analysis, Bank of Canada
Patrick Sabourin
Patrick Sabourin is Senior Policy Advisor at the Bank of Canada. He previously worked at Finance Canada. He is a member of the Price Measurement Advisory Committee (PMAC) for Statistic Canada. He supervised work related to the Canadian Survey of Consumer expectations and advises senior management on key policy developments and price measurement issues. He has presented and authored/co-authored a number of reports on CPI inflation including: the size of the bias in the CPI, measuring durable goods and housing prices in the CPI and limitations of measures of owner-occupied housing in the CPI. Patrick has a Master’s degree in economics from the University of Quebec.
Senior Economist. Consumer Prices Division, Statistics Canada
Faouzi Tarkhani
Faouzi Tarkhani is a Senior Economist at the Consumer Prices Division of Statistics Canada. He has managed several statistical programs, including the 2011 Canadian CPI Basket Update, Canadian inter-city price indexes, and Canadian productivity statistics programs. Tarkhani has made significant contributions to the enhancement of CPI calculation and is the designer of the capital service measure used in the Canadian Multifactor Productivity Program.
Tarkhani is an IMF Price Statistics Advisor since 2013, and has authored numerous professional articles published in leading economic journals, such as OECD Economic Studies, Canadian Public Policy, Actualité économique, Monthly Labor Review, among others. He has been a Chartered Financial Analyst since 2002 and holds a Master’s degree in finance from the University of Montreal.
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