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Effect of changes in indirect taxes on the CPI

The Bank of Canada estimates that the effect of changes to indirect taxes in May was 0.002 percentage points for total CPI and 0.002 percentage points for the subset of the CPI that excludes eight of the most volatile components. These effects result from hotel room tax changes in some hotels in Ontario as well as an adjustment of the provincial tax on gasoline in PEI.

The contribution of changes in indirect taxes to year-over-year variations in the total CPI and in the core CPI in May was 0.01 percentage points and 0.00 percentage points, respectively.

The Bank of Canada's measure of core inflation excludes eight of the components of the CPI basket that display the greatest volatility, as well as the effect of changes in indirect taxes on the remaining components. The latest data on core inflation will be released on the Bank's Web site at 8:30 a.m. on Tuesday, June 20.