Decoding discrepancies in Canada's food price data

Checking food inflation

There are different ways to monitor food prices and inflation. However, when evaluating the accuracy of our federal agency tasked with measuring food price changes, it's clear that much work is needed.

As months pass, Statistics Canada’s reports suggest that food inflation is easing, and prices are gradually stabilizing. However, many consumers are not experiencing this stabilization firsthand. This perceptual discrepancy has raised questions about the accuracy of Statistics Canada’s data on food prices.

Assessing the accuracy of data from the federal agency has been challenging, but recent analysis provides some insights. Through systematic price checks across the country, a discrepancy between Statistics Canada’s reports and the Agri-Food Analytics Lab’s Price Portal data has emerged. As methodologies and data access can vary, discrepancies are expected. But this of course raises concerns about the accuracy of national statistical forecasting and its impact on consumers and policy decisions.

For example, the February 2024 list of selected food products released by Statistics Canada last week shows significant differences compared to the prices observed in grocery stores. That list is always released a few weeks after the CPI. When comparing our list of prices with Statistics Canada’s data, we found that the mean absolute error (MAE) between the two lists is 5.59. That means, on average, prices reported by Statistics Canada deviate from the actual observed values by 5.59%.

Specifically, February 2024 data reveals significant variances in food price changes. For instance, oranges were reported at -6% by Statistics Canada, while our data shows an increase of 20.1%. Similarly, avocados were reported at -4% by Statistics Canada, compared to our observation of a 9% increase. These discrepancies are not isolated instances; they are part of a pattern where 47% (16 out of 34 items listed) of food items are underestimated by Statistics Canada. This suggests that the agency’s reports may not always accurately reflect food inflation, although it is not indicative of a deliberate underestimation.

The implications of these underestimations and overestimations are significant. For consumers, it means that the cost of living might be higher than anticipated, impacting household financial planning. For the economy, it suggests that inflation in the food sector might be more pervasive than official figures indicate, potentially leading to misinformed policy decisions.

The MAE of 5.59 is not just a statistical figure; it represents the variance in real-world costs that Canadians face daily. This variance can exacerbate financial strain on families and may necessitate a recalibration of social assistance programs to accurately reflect the cost of living.

To enhance the accuracy of food price data, there is a clear need for Statistics Canada to refine its data collection and analysis methods. Collaboration with independent research bodies could improve the reliability of the data, ensuring that it accurately reflects market trends and aids in better-informed decision-making.

In October, Minister François-Philippe Champagne announced an investment in the Contributions Program for Non-Profit Consumer and Voluntary Organizations to broaden the scope of existing consumer projects, including expanding research in the retail sector, specifically in groceries. However, further investment is necessary.

Regardless of public opinion, Statistics Canada remains a crucial source of economic indicators. However, these are just that — indicators. Canada could benefit from a broader spectrum of reliable data sources.

While there is no reason to believe that these differences are deliberate, the discrepancies highlighted by Dalhousie University’s Price Checks urge a re-evaluation of how food price data is collected and reported in Canada. Canadians need to feel confident about the accuracy of the federal agency’s reports.

Addressing these discrepancies is crucial for better budgeting and policy planning, ultimately affecting the economic well-being of all Canadians.

Sylvain Charlebois is a professor and senior director of the agri-food analytics lab at Dalhousie University and co-host of the Food Professor podcast.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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