Consumer Price Index (CPI)
Quick Definition
A measure of the average change in prices of a typical basket of consumer goods.
Full Explanation
The Consumer Price Index (CPI) measures the average change over time in the prices paid by Canadian consumers for a representative basket of goods and services including food, shelter, transportation, clothing, and recreation. Statistics Canada publishes CPI data monthly. The Bank of Canada uses CPI as the primary measure of inflation, targeting a 2% annual increase. The CPI is important for Canadians because it affects mortgage qualifying rates, RRSP/TFSA contribution room adjustments, OAS payments, and wage negotiations.
Related Terms
Inflation
The rate at which the general price level of goods and services rises over time.
Bank of Canada
Canada's central bank, responsible for monetary policy and setting the overnight rate.
RRSP (Registered Retirement Savings Plan)
A tax-deferred savings account for retirement, with deductible contributions.
TFSA (Tax-Free Savings Account)
A flexible registered account where investment growth and withdrawals are completely tax-free.
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