Canadian Foreign Post Indexes

Detailed information for April 2024

This survey collects data for the computation of comparative indexes of retail prices and costs encountered by Canadian federal government personnel stationed to foreign locations at a given point in time.

Data release - April 4, 2024

• Questionnaire(s) and reporting guide(s)
• Description
• Data sources and methodology
• Data accuracy

Description

The Canadian government employs military and civilian expatriates in approximately 400 locations around the world. Canada-based personnel who serve at these posts may experience considerably different living conditions from those in Ottawa-Gatineau, headquarters of the Canadian federal government. Among these differences are the prices for consumer goods and services. Higher prices, fluctuating exchange rates and inflation at the post may mean the purchasing power of their Canadian dollar is not as strong as it would be in Ottawa-Gatineau.

The Government Allowances Section of Statistics Canada's Consumer Prices Division is responsible for the computation of indexes of comparative retail prices in support of a system of allowances and related provisions for Canadian government employees posted outside Canada. These include the Foreign Service Directives (FSD), the Military Foreign Service Instructions (MFSI), and the Technical Assistance Regulations (TARs). They are designed to assist employees where the cost of living is higher than in Ottawa-Gatineau by providing an allowance to compensate for higher product costs at the post. The objective is to keep the purchasing power of posted employees equal to their counterparts in Ottawa-Gatineau in any given month.

This survey collects data used to calculate comparative indexes of retail prices for a specific basket of products (goods and services) purchased by Canadian federal government personnel stationed at a foreign location at a given point in time, compared to prices of a similar basket of products in Ottawa-Gatineau. FSD 55 governs this Post Index, used in the calculation of the Post Living Allowance.

Applied to salary ranges, the Post Index is intended to provide employees with the financial means to maintain a lifestyle comparable to that which would be enjoyed by similar family income earners in Ottawa-Gatineau. The Post Index is not designed or intended to create incentive or inducement for service abroad. The price level at the point of comparison is always expressed as 100; thus, a foreign post index of 135 indicates that for the range of products compared, we estimate price levels at the foreign post to be 35 percent higher than those in Ottawa-Gatineau.

The products represented in the Post Index are weighted according to their relative importance in consumer expenditures. For example, Canadians spend a much larger share of their total expenditures on milk than on waxed paper. Weights ensure that a 10% difference in the price of milk would have a greater impact on the Post Index than a 10% difference in the price of waxed paper.

Post Index basket weights are obtained from surveys of consumer expenditures, Statistics Canada's Survey of Household Spending (SHS), and relate to a specific year. Basket weights based on 2019 consumer expenditure data are used for surveys conducted after 2022. Surveys conducted prior to 2022 use 2005 SHS-based expenditure weights. For the purposes of the Post Index, a sub-sample of respondents are considered. These include households of one or more persons from the 10 provinces where:
• at least one member was there for the full year, and
• at least one member 21 years or older worked full-time for 52 weeks, and
• this same member had no income from self-employment and had income from wages and salaries, and
• the household's 2019 income from wages and salaries was at least $45,000.

No surveys were conducted between March 2020 and January 2022 due to the COVID pandemic.

Post Index surveys are typically conducted every 4 to 5 years. There are three main components to the survey:
- Price collection using Pricing Schedules, Ottawa-Gatineau
- Price collection using Pricing Schedules, foreign posts
- International Retail Prices and Costs Survey Individual Report of Consumer Information (CIS)

Once calculated, Post Indexes are subject to a monthly review to ensure their validity in the consideration of currency exchange rate fluctuations and differences in the rate of inflation between the foreign location and Ottawa-Gatineau.

Reference period: Month

Collection period: Collection dates are normally limited to a 1 to 2 week period during the month when a foreign location is scheduled for a survey.

Subjects

• Prices and price indexes

Data sources and methodology

Target population

The target population for the International Retail Prices and Costs Survey Individual Report Consumer Information (CIS) questionnaire is federal government personnel and agents posted to foreign locations. The questionnaire should be completed by a representative of each family at the post.

The target population for the post Pricing Schedule questionnaires is retail outlets normally patronized by foreign post employees and retail outlets in Ottawa-Gatineau, Canada (base city). Collection includes prices paid by post personnel for goods and services and identify the name of stores, outlets, or retailers where they shop. This includes restricted access outlets, e.g., diplomatic stores or tax-free sources and other locations used by these respondents. The Ottawa-Gatineau retail outlets include a combination of those from the Consumer Price Index (CPI) sample and others for product types not included in the CPI sample.

Only categories of products that have been agreed upon by the Canadian government and its employee associations are included on the questionnaire.

Instrument design

Questionnaires are subject to revision when new product weights are introduced. Revision permits the introduction of new products or additional specifications for categories of expenditures that are increasingly relevant to a typical family expenditure pattern. Individual specifications may be revised annually to capture changing models or formats, particularly those related to electronic and audio/visual products.

Information requested in both the Individual Reports of Consumer Information and the price collection schedules serves to ensure that these questionnaires are relevant and elicits compliance, providing the data required to produce the Foreign Post Indexes.

Sampling

This is a sample survey with a cross-sectional design.

The target population is all Canada-based federal employees at a foreign location. The sample of retail outlets is a judgmental sample of local retailers frequented by post personnel. Some 400 price specifications are included from the universe of retail items covering the specific basket of products (goods and services) included in the survey.

Some important criteria and considerations for designing a basket of products are as follows:
- The product should be universally available at all locations because the same pricing survey questionnaire is used to collect prices for the products at each post. Availability may be a particularly constraining consideration in establishing baskets for international price comparisons because of the wide variation in markets, climates and products.
- The product should be one commonly purchased by Canadian families and have some significance in their expenditure patterns.
- The product should be easy to identify and be amenable to reasonably precise description.
- Most of the price collection required for a Post Index survey is undertaken by personnel at the post and not by trained price collectors. As a result, product specifications tend to be focused on basic products.
- Products are neither included nor excluded based on any moral or social judgments. They are included because they represent significant elements of reported average household expenditures.
Products fall into 13 major categories:
1. Food at home (from stores)
2. Food away from home (from restaurants)
3. Personal care supplies and services
4. Household supplies and services
5. Patented medicines (non-prescription)
6. Reading and recreation
7. Clothing and home furnishings
8. Communications
9. Transportation
10. Tobacco and alcohol
11. Domestic help
12. Household maintenance and repairs
13. Household insurance

The following five product categories are excluded and are addressed in other provisions of the Foreign Service Directives:
1. Shelter
2. Fuel and utilities
4. Education
5. Vacation trips
6. Savings and investments

Data sources

Responding to this survey is voluntary.

Data are collected directly from survey respondents, extracted from administrative files and derived from other Statistics Canada surveys and/or other sources.

Sources:
- Prices from Ottawa-Gatineau retail outlets collected by Statistics Canada
- Data collected from foreign posts
- Statistics Canada
- Survey of Household Spending (SHS)
- Consumer Prices Index (CPI)
- Bloomberg
- Bank of Canada
- International Monetary Fund (IMF),
- Eurostat,
- Bureau of Labor and Statistics,
- Numerous national central banks and international statistical agencies.

Data integration from multiple sources is used to assess local and foreign price movements and rates of exchange to Canadian dollars.

Initial contact is made with Departmental headquarters, followed by confirmation from post administration. The surveys are distributed as electronic questionnaires and are returned through departmental channels. The collection is coordinated by post administration. Individual questionnaires, price schedules and supporting documentation are normally returned within one month of the survey being carried out. Direct follow up through the departmental headquarters and/or the post is undertaken by e-mail or telephone if the return of the survey is delayed. The same procedure is undertaken to obtain missing or delinquent portions of the survey when submitted in an incomplete fashion.

Collection is normally limited to a 1 to 2 week period during the month when a foreign location is scheduled to conduct a survey. The general aim is for Post Index surveys to be carried out at each foreign post, in sequence, at about 4 to 5 year intervals. Requests for specific post surveys may be made outside these timeframes, as agreed with the Treasury Board Secretariat and Global Affairs Canada. These out of sequence surveys may result from:
- volatility of retail prices in each particular country,
- instability in currency exchange rates, or
- decision to closely monitor changes in local retail prices faced by Canadian personnel through reference to other indicators.

View the Questionnaire(s) and reporting guide(s).

Error detection

All respondent supplied data (completed questionnaires) is subject to initial review for completeness. Direct follow up through the departmental headquarters or the post is undertaken to obtain missing or incomplete portions of the survey or to resolve inconsistent responses.

All captured data is checked for upload and input accuracy. Outliers are identified using both automated and manual procedures.

Detailed analysis is carried out on product category aggregates. Differences between the projected Post Index and the result of the survey are reviewed for validity and coherence.

Imputation

Automated imputations are used to resolve low level price aggregations for specific product categories. These involve proxy aggregate assignment for homogeneous products where prices have not been reported on the questionnaire and the foreign post confirms that price information cannot be obtained.

The weight for the low level product without a price is re-distributed to other products in the same product category.

Estimation

The following steps are applied to determine the index level of each reported purchase source (e.gl, local retailers, special outlets, imports):

a) For every product priced at a given purchase source, an average price is calculated. The average price calculation requires adjustments for measures and sizes, and for some sources, transportation, packing, insurance charges, etc. must be added.

b) The average product price for each source is converted to Canadian dollars using the exchange rate in effect for each post's applicable currency at the time the survey is conducted.

c) Each source's average product price is compared to the average product price in Ottawa-Gatineau, expressed as a ratio. For example, a ratio of 2.0 for a particular product would indicate that the post price from that source is twice the Ottawa-Gatineau average price.

d) These ratios are then weighted (assigned a relative importance in the foreign post basket) based on the Survey of Household Spending (SHS, record number 3508). The product price ratio is multiplied by the weight and the results are aggregated to produce the index for that source.

The calculated indexes each reported source, are combined to create the Post Index for the location.

Quality evaluation

Once established, every Post Index undergoes monthly review, to assess its accuracy in consideration of exchange rate movements and changes in Ottawa-Gatineau prices and price change at the Post. This information is based on host country national statistical indicators (Consumer Price Index, record number 2301, or similarly named indexes), data from international organizations, and economic or price information received from the post.

Disclosure control

Statistics Canada is prohibited by law from releasing any data which would divulge information obtained under the Statistics Act that relates to any identifiable person, business or organization without the prior knowledge or the consent in writing of that person, business or organization. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

Although price data collected outside of Canada are not subject to the Statistics Act, respondents are given the same guarantee of confidentiality as if the data were collected in Canada. Price data are converted to price indexes and data are released such that it is not possible to identify the price data of the suppliers of the raw price information.

Information supplied by individuals posted to foreign locations, once received by Statistics Canada, is deemed to be subject to the Statistics Act.

Revisions and seasonal adjustment

All established (based on survey data) Post Indexes are reviewed monthly, applying exchange rate fluctuations and differences in inflation between the foreign locations and Ottawa-Gatineau. When the review finds that the index value changes by at least 3% (upwards or downwards) from its current value, it is updated. This new index value continues to be reviewed monthly, with any required updates applied, until it is next surveyed.

Data accuracy

The Post Index is a measurement founded on standard statistical procedures. It is designed to meet a very specific purpose, to support the Foreign Service Directive 55 (FSD 55). This directive assists employees where the cost of living is higher than in Ottawa-Gatineau by providing an allowance to compensate for higher product costs at the post.