Why Canada's lower inflation rate is misleading compared to the U.S.

Trevor Tombe

1h ago· 4 min readenInsight

Summary

Economist Trevor Tombe explains that Canada's seemingly lower inflation rate compared to the U.S. is misleading due to methodological differences in how each country calculates its Consumer Price Index (CPI). Canada's CPI includes mortgage interest costs (which have risen sharply due to higher interest rates), while the U.S. CPI excludes them. When adjusting for these differences, Canada's underlying inflation pressures are actually similar to or worse than those in the U.S. The article highlights how different statistical methodologies can create misleading cross-country comparisons of economic indicators.

Source

bskyWhy Canada's lower inflation rate is misleading compared to the U.S.thehub.ca

Key quotes

· 4 pulled

Even when Statistics Canada reports its updated measure of inflation for May next week, it still won't be anywhere near the U.S.

Canada's CPI includes mortgage interest costs, which have surged as the Bank of Canada raised interest rates. The U.S. CPI does not include mortgage interest costs.

When you strip out mortgage interest costs from Canada's CPI, the picture changes dramatically.

The gap between Canadian and American inflation rates is largely an illusion created by different measurement methodologies.

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Economist Trevor Tombe examines why Canada's inflation rate appears lower than that of the United States and explains how methodological differences between the two countries' consumer price indexes obscure a more accurate comparison of actual price press

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