The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

- What is the consumer Price Index (CPI)? For some it's a source of con- fusion. but in simple terms it is a sample shopping basket of the goods and services which . a repre- sentative Canadian family might purchase. This "shopping basket" serves as an indicator of the rate of price changes for those goods and services. Note that the CPI does not mon- itor prices, but rather changes in prices. ‘ The performance of the CPI is based on a speci- fied period which is assign- ed a value of too, curfently 1911. In subsequent months the prices of the products are expressed as a per- centage of the item's price during that base period. For example, the priest of eggs in 1971 = 100, but by If food prices go up by ten per cent, do we need a ten per cent raise to offset the increase? "No," say the Public En- quiries Unit otthe Anti-Inflation Board, "but this is a common misconception." Food purchases don't make up 100 per cent of a family's purchases. though sometimes it may seem like it. In order to accurately assess the impact of price hikes on the family budget. the consumer should also judge the relative import- ance of that expenditure in the overall budget. This is what Statistics Canada does in the monthly Consumer Price In- dex. (CPI). Each item is 'weighted' ac- cording to its relative" importance in an average household. For example. food prices have climb- ed by ll per cent since August, 1976. According to the CPI weightings, food accounts for gt per cent of the total Ward M. Neuert of Kitch- ener has been appointed organizer in the 1977 Canada Savings Bond Campaign. payroll savings division. for the Kitchener-Waterloo area Mr. Neuert has been an organizer for Canada Saw ings Bond Campaigns In the past. . Partitioning of the CPI --ii-ii- Toronto Dominion Bank reduces loan rates; . it Toronto Dominion Bank announced this week a gen- eral reduction in its consumer loan rates to 12.5 per cent and a further reduction in loan rates for new cars to 11.5 per cent. The new rates will be effective Octo- ber 17, l977. Kitchener man heads Savings Bond campaign Toronto Dominion had previously reduced its new car loan rate from 13.5 per cent to 12.5 per cent, effec- tive in mid-September. The rate for other consumer loans. now reduced by one pet cent to 12.5 per cent, had remained at 135 per cent. Toronto Dominion's increased' by The how and what of the CPI Stt.6 per cent, so the cur- rent price of eggs is 192.6 per cent of the1971,or base year price. These "are the figures which the CPI re- ports monthly. _ The current index for beef, 136.7 in the month of August,. does not mean that beef is cheaper than eggs, at 192.6. A trip to the supermarket will com firm that. What it does mean is that the price of beef has risen a good deal less in the period from 197 l tol977 than haseggs. The index cannot acco- mmodate the substitutions that most consumers will make in the face of rising prices, or seasonaMs un- availability of produce. The products monitored for the index are fixed in order to keep accurate comparative statistics. Consumers should be able This year marks the 32nd anniversary of Can- ada Savings Bonds and during the period 1946-1976 inclusive. .more than . $7.9 billion in Canada Savings Bonds was pur- chased through the Payroll Savings Plan across the country. Last year in this area. expenditure in the, sample shopping basket of goods and services of the 'average family'. Theoretically then. the additional 'revenue a family needs to offset the increasing cost of food is 11 per cent of 27. or approximately three per cent of the total amount spent on goods and services. . "._____" =A'.-iagwsr, These are only general indications and the figures do not necessarily re- flect the proportions each family com- mits to the essential goods and services it purchases. But a family can calculate what weight food has in its spending. The budget does not include income and property taxes. any savings or investments, or consumer loan pay- ments including those payments on the principal of a mortgage. Mortgage w. terest is included in the housing com- ponent. . to do better than the CPI, family by substitutions. shopping specials and vol- ume buying. Statistics Canada carries out periodic Family Ex- penditure Surveys in a large, scientifically-select- ed sample of urban house- holds in order to determine not only the prices paid for the selected product'. but also which products should be monitored. Given that not every household makes the same purchases, the index can only be representative. But most families eat, require clothing, transportation. health services and hous- ing and these are the broad areas which the CPI mon- itors. Within each of these general categories are a more detailed breakdown such as public transporta- tion and 8.092 employees bought a total of $7,359.000 worth of Canada Savings Bonds through payroll savings. During the Campaign. which runs from mid-Sep- tember to mid-November. CSB organizers will visit about 2.800 business and in- dustrial establishments in Ontario to help set up pay- reduction of new car rate: eral downward pricing of market. A bank spokesman said Toronto Dominion can price its car loan rates below the rate offered by other lenders because it encourages its customers to deal directly with the bank, - - - - - . ,7-.-) IL_ Inn"... The 'spokesman glided that he expected tho lower consumer loan rates would help to stimulate pur- chases at a time of slow growth in the economy, general indications the family car. rates in September led to a gen- lit of consumer loan rates in the household fuel and utili- tiesand mhnm. Since re .are many items included in the index the Expenditure' Survey also assigns the relative importance of a given item in the overall family bud- get. For example. food's relative importance, or 'weight' in the scale is 27 per cent of the total. Clothing is given a weight of eight per cent. Should the clothing com- ponent rise' by ten per cent that does not mean that ten per cent of the con- sumer's total purchasing power is lost, but that 10 "1sfl-if-i If a family's food costs or housing costs increase by mean the family salary must also go up by 10 pot graph shows that the average family budget includl food which means that the 1 'tter cant tood cost inc is really " pet cent of 27 par cant or.approximata ovatall budget. CSB buyers on the pay- roll savings plan will be introduced to a new bond this year - the Compound Interest Bond which re- places the familiar coupon bond of past years. The compound bond. which will roll savings plans for the purchase of the new ser- ies.try employees. 4O flfl. 20 1O . “mace, Cttmett+.iwtttteattq. Omb- 19,1m-Pm " per cent of the amount a family sets asl9t toy cloth- Included in the survey are sales and excise taxes. but personal savings and income taxes are not in- eluded since they Sauna! be clearly associated with the purchase of a specific good or service. The calculation of the monthly CPI from the over 100.000 surveys is a mas- sive undertaking, and only one of a number of pricing surveys carried on by Statistics Canada. But the CPI is a frequently used pay' interest on interest, is one of a number of changes being introduced this year ilione would haVe erod- irGiGce the flexibility and security of Canada Sav- ings Boer. . ...,,.__,V, m addition to the Com- pound Interest Bond avail-' able on payroll, savings plans at places of employ- ment, investors have a choice They can buy either this bond or the Regular Interest Bond wherever casing costs increase by " pet cent it does not st also go up by 10 pet cent. For instance this we family budget includes 27 per cent spent on 1 1 . per cent tood cost increase ovet the past year per cent or.approximaterN three per cent of the they bank or invest, Both bonds are dated November l. 1977, carry a nine-year term and pro- vide 8.06 per cent ayerage annual yield to maturity, Interest rate In the first year is TO per cent. then 825' per cent for each sub- sequent year to maturity in1986, In excess of $219 mil- lion worth of Canada Savings Bonds was pur- chased by more than a quarter of a million' em- ployees through payroll savings plans m Ontario last year Canada-wide m 1976. a record $619 mil- ' is lion worth of Canada Sav- ges ings Bonds was bought ear through _the payroll sav- ility ings plan by more than "sae- 815.000 Canadian residents. ' Canada Savings Bonds 'om- are available to all Cana- vail-‘ dians, either through the ings payroll savings plan where My- they work or by individual , a purchase for cash or by Iher instalments at local banks :ular and authorized invest- ever ment dealers. stockbrok- ers. trust companies and lated credit unions. indicator of price movie ments; many labour con- tracts' include cost-of-living allowance (COLA) clauses which allow for wage in- creases linked to the move- ment of the CPI; old age security pensions are ad- justed each year' to take into account the changes in the index. and since 1973. personal income tax exemption levels have been adjusted to reflect the changes in the CPI. Strictly speaking. the CPI is not a "cost-of-tiv- ing" index, but it is a tttHF ful indicator of where prices 'are going. - Canada Savmgs Bonds play a dual role in the de- velopment of Canada. says a spokesman for the Finance Department. “They help individuals save, on a reg- ular basis. towards achieving family economic goals and at the same time play an important role in the Federal Government's debt management program The bonds are a means whereby all Canadians can be directly involved in fi- nancmg their country's growth and future develop- ment, .. he said i