Canadian Foreign Post Indexes
Detailed information for January 2018
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 - January 4, 2018
The Canadian government employs military and civilian expatriates in more than 400 locations outside Canada. Personnel who serve at these posts face numerous expenses they would not normally incur if they worked in Ottawa. Among these differences are the prices they may have to pay for consumer products (goods and services). Higher price levels, fluctuating exchange rates and inflation at the post may mean the purchasing power of their Canadian dollar is not as great as it would be in Ottawa.
The Government Allowance and Spatial Indexes Section of Statistics Canada 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 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 on 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. FSD 55 governs this Post Index, used in the calculation of the Post Living Allowance.
Applied to salary ranges, the Post Index equalizes the purchasing power of the portion of the employee's salary that is used to purchase the Post Index "basket" of products. The price level at the point of comparison is always expressed as 100; thus a foreign post index of 130 and 135 indicates that for the range of products compared, we estimate price levels at the foreign post to be between 30 and 35 percent higher than those in Ottawa.
The products represented in the Post Index are weighted according to the relative importance of those items in consumer expenditures. For example, Canadians as a whole, 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, and relate to a specific year. The weights are currently based on 2009 consumer expenditure data.
Post Index surveys are conducted every 30 to 36 months. There are three main components to the survey:
- Price collection, Ottawa
- Price collection, foreign post
- International Retail Prices and Costs Survey Individual Report of Consumer Information
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.
Reference period: Month
Collection period: Collection dates are normally limited to a 1-2 week period during the month when a foreign location is scheduled for a survey.
- Prices and price indexes
Data sources and methodology
The target population for the International Retail Prices and Costs Survey Individual Report Consumer Information 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 survey reflects the purchasing habits of these employees in terms of the source of products at the specific location including those from restricted access outlets, e.g. diplomatic stores or tax-free sources and other locations used by these respondents.
The target population for the post Pricing Schedules is retail outlets normally patronized by foreign post employees and retail outlets in Ottawa, Canada (base city). The Ottawa 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.
The universe of commodities includes only those categories of products that have been agreed upon by the Canadian government and its employee associations.
Questionnaires are subject to major revision when new product weights are introduced, usually every four to five years. 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.
A program of visits to foreign locations is undertaken annually by employees from the Foreign Posts Unit. The purpose of these visits is to explain the survey methodology and to gain first-hand knowledge of the economic circumstances faced by Canada based staff. On-site discussion of the 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.
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 available 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 item 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, item specifications tend to be focused on basic items.
- Products are neither included nor excluded on the basis of 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
6. Reading and recreation
10. Tobacco and alcohol
11. Domestic help
12. Household maintenance and repairs
13. Household insurance
The following six product categories are excluded and are addressed in other provisions of the Foreign Service Directives:
2. Fuel and utilities
3. Home furnishings
5. Vacation trips
6. Savings and investments
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.
Ottawa price data
Prices from Ottawa retail outlets are collected by Statistics Canada on paper questionnaires.
Data collected from the foreign post
Initial contact is made with Departmental headquarters, followed by confirmation from post administration. The surveys are distributed electronically for printing locally and completed paper forms are returned by mail or 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.
Data capture includes paper questionnaires with manual data entry to a computer; data extraction from administrative files, and uploads of customized electronic files or extracts.
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 30 to 36 month 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.
Barbados Statistical Service, Retail Price Indexes (Local): Used as a measure of consumer price inflation in derivation of foreign post index for Barbados.
Data is combined from various Canadian and international sources:
- Statistics Canada's Survey of Household Spending (SHS);
- Statistics Canada's Consumer Prices Index (CPI)
- International Monetary Fund (IMF),
- the Commonwealth of Independent States (CIS),
- the Central Bank of West African States; and
- Numerous national central banks and international statistical agencies.
Data integration from multiple sources is done to assess local and foreign price movements and rates of exchange to Canadian dollars.
View the Questionnaire(s) and reporting guide(s).
All respondent supplied data is subject to initial review for completeness. Direct follow up through the departmental headquarters and/or the post is undertaken by e-mail or telephone to obtain missing or delinquent portions of the survey when submitted in an incomplete fashion or to resolve inconsistent responses.
All captured data is checked for accuracy of input. Outliers are identified using both automated and manual procedures.
Detailed analysis is carried out to produce product category aggregates. Differences between the projected Post Index and the result of the survey are reviewed for validity and coherence.
Automated imputations are used to resolve low level price aggregations for specific categories of products. These involve proxy aggregate assignment for homogeneous items where prices are not available. These are used only if the foreign post confirms that price information cannot be obtained.
In areas of homogeneous products, the weight of missing aggregates is re-distributed within the category in question.
The following steps are applied to determine the index level of each reported source of purchase:
a) For every item 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 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 average price is compared to the average price in Ottawa, expressed as a ratio. For example a ratio of 2.0 for a particular item would indicate that the post price from that source is twice the prevailing Ottawa price.
d) These ratios are then weighted (assigned a relative importance in the foreign post basket) based on the 2009 Survey of Household Spending (SHS, record number 3508). The item ratio is multiplied by the item 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.
Once established, every Post Index is subject to a monthly review, to assess its accuracy in consideration of movements in exchange rates, movements in Ottawa prices, and information on price changes at the Post. This information is obtained from 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.
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.. 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.
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 by providing an allowance to compensate for higher product costs at the post.