Trainman News

Labor Keeps Sharp Eye on New
Cost-of-Living Index in Canada

By JACK WILLIAMS
TRAINMAN NEWS Canadian Correspondent

Canadian labor is keeping a sharp eye on the government's new cost of living index. Actually it is no longer the COL index because it has a new name, consumers' price index, and the initials CPI will gradually replace COL. The new index figures are based on more up-to-date living habits which were determined by a one-year survey conducted by the Dominion Bureau of Statistics in 1947-48. The Bureau says this makes it possible to reflect more accurately the changes in today's actual living costs.

The old index, which was based on prices in the 1937-38 period, is being continued for six months and after that time only CPI figures will be issued. This presents somewhat of a problem for the many thousands of workers under contracts which still contain escalator clauses providing for automatic wage adjustments as the index changes. Because one point under the new CPI is a very different thing from one point under the COL index, it is going to be necessary to re-negotiate these contracts.

Wide Variations
The different starting points result in wide variations. For instance, between August and September the old index dropped 1.1 points while the new index rose .1. The following month the new index dropped back the same amount, .1, while the old figures slid another 1.5. This left the COL at 185.0, or 85 points above 1937-38; while CPI stood at 116, which was 16 points above 1947-48.

The factors which go into the index, as well as the different dates, account for this variation. To form a base the bureau made a study of the buying habits of what they considered average families. The people surveyed lived in 27 different cities, all with 30,000 or more population. Families ranged in size from two adults to two children, and all had incomes that fell somewhere within the $1,650 to $4,050 bracket.

The survey covered mainly what they actually purchased during the year. As with the old index the Bureau used this information to establish a family basket of purchases and expenditures. The COL was based on a basket that held 160 items, the new basket has 225. More weight has been given to such purchases as fresh fruits and vegetables, children's clothing, home ownership costs, fuel oil, and items for transportation and recreation.

DBS officials say they chose 1949 as the new base year because it was a period of "relatively stable prices." In 1947 and 1948 prices were rising rapidly. The years 1950 and 1951 were ruled out because of economic dislocation resulting from the Korean war.

Savings are not figured in the new index and life insurance, which was an element in COL, has been dropped. However, health insurance, considered covering medical and hospital costs, has been added. Among the other items which are no longer counted are rolled oats, dried beans, women's woolen underwear and woolen stockings, kitchen pails, cigars, and many others. A long list of items has been added, among them: margarine, cake mix, orange and apple juice, dry cleaning, taxi, beer and liquor, and automobile maintenance.