Canada’s Inflation Revisions Show Something Is “Really Wrong”: National Bank

Canada’s headline inflation is falling, but core inflation, the central bank’s preferred measure, is still climbing. That was the focus of a research note from National Bank of Canada (NBF) last week, in response to July inflation data. Core inflation, considered a more stable measure, climbed to a three decade high. Even more surprising, this year’s numbers have been revised three times, meaning this measure isn’t as stable as the central bank believed it was. 

Canadian Inflation Is Rising Retroactively As Revisions Stack Up

NBF found the average of the three core measures continued to rise in July. The rate reached 5.3%, the highest it’s been in over 32 years. The sudden boost was so large due to significant revisions to previous data.

The bank points to January 2022 data that was originally reported at a fairly robust 2.3% in the February report. Last month, Stat Can revised January’s core inflation to 3.2%, adding nearly a full point. The fun didn’t stop there, in the August release January 2022 was revised once again to 3.6% — more than a point higher than originally reported.  

“The cumulative revisions since the beginning of the year are nothing short of dramatic,” said the bank. 

Canada’s Current Inflation Models Have Many Shortfalls

It’s important to emphasize that core CPI is supposed to be much less volatile than headline. It’s used to reflect capacity pressures and indicate excess demand. The BoC downplayed headline inflation, believing the economy wasn’t firing on all cylinders at this point. 

They eventually dismissed the odd situation as not appearing in core inflation. With the revisions, core inflation shows Canada breached excess demand back in October. The central bank was still using quantitative ease (QE) to create inflation at this point. 

“Without going into details, suffice to say that the recent upward deviation of inflation has challenged the statistical method the CPI-common is based on and made it a lot more volatile and less correlated with other measures of core inflation,” explains NBF’s economists. 

“Given this inherent weakness, we recommend focusing on CPI-Trim and CPI-median, which have proved better at capturing underlying inflation trends.” 

All of this isn’t to say there’s some sort of concentrated effort to downplay inflation. Though NBF has previously explained methodology changes will persistently downplay inflation going forward. It more so highlights this indicator doesn’t quite show what the central bank thinks it does. 

Bezos once explained this issue very concisely: “…when the anecdotes and the data disagree, the anecdotes are usually right. There’s something wrong with the way you are measuring it.” 

If the monetary system is based almost entirely on inflation targeting, how it’s measured requires much more public discussion.



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  • Ethan Wu 2 years ago

    2.3 points to 3.6 points is a 56% increase. That means the most STABLE items in the basket saw price increases more than 50% higher than the central bank was addressing.

    There’s certainly trade related inflation pressures, but Tiff doesn’t think excess demand happened until March 2022. When everything is at record sales volumes it should have been a sign that we didn’t need to continue to inject billions worth of credit into the system to keep it flying higher than normal.

    • Kana-duh 2 years ago


      When folks at BoC and CMHC compensation packages are based on ensuring the big banks and their investors are taken care of first, don’t be surprised that Canadians are now living the have/have-nots model of the the corrupt countries we see all around us. This is all by design and won’t change unless the streets are filled with protesters and politicians faces are covered with raw egg.

  • Trader Jim 2 years ago

    Jesus. I missed the article linked when it was published I guess, but this:

    “The items whose weights are expected to increase in the consumer basket as the economy reopens (transportation, gasoline, recreation) will therefore occupy too small a place in the new basket… official inflation data is likely to keep underestimating inflation pressure going forward.”

    Understanding this could have saved Canada from the inflation crisis as a whole.

  • Rob 2 years ago

    Macklem, Poloz, Carney, Dodge, Thiessen, Crow are what has been ‘really wrong’. As Canadians we should be embarrassed and demanding personal accountability for 30 years of incompetence, negligence, and egregious spin.

  • richard stanbridge 2 years ago

    this applies to anything; BAD INPUT = BAD OUTPUT
    inflation has been corrupt since the 1970’s when there was a concerted effort to eliminate cola clauses from labour contracts. and now the BOC is telling labour once again to forget pay raises and bite the bullet while executive salaries have gone through the roof. i wonder why there is inequality in the world. LOOK TO THE BANKS

    • Dj dog 2 years ago

      Banks are crooks, Td bank had a full renovation on the floor in toronto downtown, the floor is just for meeting, they have 3 tables there made out marble with wood ingrained price tag? 45k each , reason for the table ? It looks cool indeed, I also heat they doing another renovation for their exac floor currently, budget 2.5 million lol

    • Lynda 2 years ago

      I’m so disgusted by the sudden inflation, but zero on pay increments. It is unfortunate that money and power reign. If we live the way we do now, imagine what it would be like for our children of tomorrow! It is difficult to keep a positive mind and envisage better days in a negative and avid world.
      Sudden inflation is like an infection, it has led to high levels of mental health, homelessness, the majority of mortality is attributable to cancer patience due to lack of time and reasonable treatment; School dropouts due to financial aid and so on…. inflation for some of us is no different from warfare and the loss of everything, including yourself. It’s my story and I stand for it!

    • Larry Kazdan 2 years ago


      The Monetary Policy-Makers Have Met The Enemy.

    • Old Greg 2 years ago


  • om 2 years ago

    Quote: “Even more surprising, this year’s numbers have been revised three times, meaning this measure isn’t as stable as the central bank believed it was.”

    Unbelievable, how come the basic measurement like inflation in the developed country is not stable (means not accurate) during a year? Are we living in the third country? Smell fishy… 🙁

  • Jimmy Jam 2 years ago

    The government sector has grown at an astronomical pace while the productive sector has not. The Government has an incentive to underestimate inflation as wages of government workers are inherently tied to inflation. They can’t afford to pay higher wages as the country is bankrupt and will be in a worse position if this happens.

  • Odin 2 years ago

    Close the economy, drastically reducing overall production: check

    Disrupt supply chains: check

    Drastically increase money supply: check

    Import new demand through immigration: check

    What the fuck did you think would happen? God people are dumb. Ive been seeing this coming since march 2020…

  • Dave Bjorkman 2 years ago

    The number 1 source of “hyperinflation” in Canada is Housing… The “Bad Input Data” found with”Crown Land” in calculating and reporting density in ALL SOURCE STATISTICS.

    It is the biggest source of inflation, asset over valuation and money printing.

    Greatest Corruption In Canada… CLEARLY.

  • Emily 2 years ago

    Offshore banking via Anything is Disgusting. Currently much like the Big BOSSES TOTALITARIANISM the british commonwealth lack of Respect for HUMANITY IS Relevant. Puts and calls Dat Joe the Trader

  • Chris 2 years ago

    The authors could not have Been in a grocery store lately .

    • RW 2 years ago

      I’m guessing you haven’t been in a library ever. They’re pointing out that Stat Can’s numbers showing prices are falling don’t reflect reality, which is what you’re saying.

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