Statistics Canada announced that the new CPI basket, based on household spending in 2024, will take effect with the May inflation data release on June 25, 2025.
The CPI basket determines how inflation is calculated, assigning more influence to categories where consumers spend a larger share of their income. These weights are updated annually to keep pace with evolving spending habits.
“To ensure the CPI remains representative of the price change experienced by Canadians, the basket weights must reflect how Canadians are spending their money,” Statistics Canada said. “A fixed-basket price index, such as the CPI, can only account for shifts in consumer spending when the basket weights are updated.”
Shelter costs now make up over 29% of the CPI
The shelter component of the index rose to 29.12%, up from 28.57% in the previous basket. That’s the highest level since before the pandemic and reflects the outsized pressure that housing costs placed on household budgets last year.
Two specific categories drove the increase:
- Mortgage interest cost: rose to 5.65% of the basket (up 45 basis points)
- Rent: climbed to 7.19% (up 33 basis points)
Although the Bank of Canada began cutting interest rates in 2024, many borrowers were still renewing at significantly higher rates compared to five years earlier. StatCan noted that “the mortgage interest cost and rent indexes posted historically large price increases on an annual average basis.”
Scotiabank economist Derek Holt said the higher shelter weight was expected. In a note to clients, he wrote that increases were likely “via mortgage interest and rent, partly offset by replacement cost.”
The homeowners’ replacement cost component, which reflects the cost of rebuilding a home, declined slightly to 4.64%, down 10 bps from the previous year.
StatCan also introduced a new method to calculate this weight, using national depreciation estimates to improve accuracy and alignment with national accounts.
The transportation component rose to 17.29%, driven largely by an 80 basis point increase in the weight assigned to passenger vehicle purchases. Improved vehicle availability in 2024 helped drive auto sales higher, StatCan noted.
Where weights fell
Spending shares fell in several discretionary categories, including:
- Clothing and footwear: down to 4.40% from 4.70%
- Recreation, education and reading: down to 10.16% from 10.42%
- Household operations and furnishings: down to 13.28% from 13.46%, driven by lower cellphone plan prices
Despite elevated grocery prices, the overall food category held steady at 16.72% of the basket. A modest decline in store-bought food was offset by a rise in restaurant dining, now accounting for nearly 6% of consumer spending.
What the update means
While the change in weights won’t dramatically move the needle on CPI itself, it does subtly shift how much influence different price categories have going forward. As Holt noted, “Usually there is a small to negligible effect on CPI at the link month.”
Still, with shelter now accounting for nearly one-third of the CPI basket, any swings in rent or mortgage costs will have an outsized impact on headline inflation.
“Statistics Canada continues to update and enhance the CPI to ensure it remains the highest quality measure of price change,” the agency said. “The 2025 basket update…incorporates weight and classification changes based on the most current and relevant expenditure data.”
CPI basket share by major component
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Last modified: June 17, 2025