Canadian Foreign Post Indexes
Detailed information for January 2010
This survey has been designed for the computation of comparative indexes of retail prices and costs encountered by Canadian Government personnel stationed at foreign locations/posts.
Data release - January 6, 2010
The Canadian government employs military and civilian expatriates in more than 400 locations throughout the world. Canada-based personnel who serve at these posts may experience considerably different living conditions from those at home. Among these differences are the prices they may have to pay for consumer goods and services. Higher price levels, fluctuating exchange rates and inflation at the post may mean that the purchasing power of their Canadian dollar is not as great as it would be in Ottawa.
The federal government has developed a foreign service compensation system that is embodied in the Foreign Service Directives (FSD), the Military Foreign Service Instructions (MFSI) and the Technical Assistance Regulations (TARs).
One element of foreign service compensation is known as the Post Living Allowance (PLA), the level of which is regulated by the Post Index. Applied to salary bands, 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 goods and services.
The goods and services represented in the Post Index are weighted according to the relative importance of those commodities in consumer expenditures. These weights ensure that a 10% difference in the price of milk, for example, would have a greater impact in the Post Index than a 10% difference in the price of waxed paper. This is because Canadians as a whole spend a much larger share of their total expenditures on milk than on waxed paper.
Post Index basket weights are obtained from surveys of consumer expenditures relating to a specific year. The weights are currently based on 2005 consumer expenditure data.
Post Index surveys are conducted every 30 to 36 months. Once calculated they are subjected to a monthly review to ensure their validity in the face of exchange rate fluctuations and differences in the rate of inflation between the foreign location and Ottawa, the base location for these surveys. Because of the limited range of goods and services included in Post Index studies and access to certain tax-free or restricted shopping venues, interested users should contact Statistics Canada to ensure the use of these indexes is appropriate for their needs.
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.
- Intercity and international price comparisons
- 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 weights are introduced, usually every four to five years. This permits the introduction of new products or additional specifications for categories of expenditure that are increasing in importance in a typical family expenditure pattern. Individual specifications may be revised annually to capture changing models, particularly those related to electronic products.
A program of visits to foreign locations is undertaken annually. The purpose of these visits is to explain the methodology and to gain first hand knowledge of the economic circumstances faced by Canadian expatriates. 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 elicit the data required to produce 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 goods and services included in the survey. Some important criteria and considerations for designing a basket of goods and services are as follows: The item should be universally available at all locations because the same survey must be used at all posts. 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 item should also be commonly purchased by Canadians 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 in the conduct of 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. Finally, items 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.
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.
Surveys are to be completed in a timely manner, subject to operational requirements of the Post being surveyed.
Collection dates are normally limited to a 1 to 2 week period during the month when a foreign location is scheduled for 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. However, specific studies may be undertaken more or less frequently than this, depending on the volatility of retail price conditions in each particular country, the instability of exchange rates and the extent to which close monitoring of changes in the local retail price situation being faced by Canadian personnel can be achieved through reference to other statistical indicators.
Initial contact is made with Departmental headquarters, followed by confirmation from post administration. The surveys are distributed electronically for printing locally and the 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.
View the Questionnaire(s) and reporting guide(s).
All submitted 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 subject to manual check to ensure accuracy of input. The data are subjected to outlier review using both automated and manual procedures. Detailed analysis is carried out to produce category aggregates. Additional analysis is done to reconcile differences between the projected Post Index and the result of the survey.
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.