StatsCan admits to five years of CPI mistakes: Knowledge Driven Revolution

Statistics Canada is double-checking its computer programs after discovering that a computer glitch understated the nation's inflation rate for the past five years.

But Tarek Harchaoui, assistant director of the agency's CPI division, said Wednesday that the problems were limited to one small part of the CPI, the price of hotel and motel rooms.

"The impact [on the total CPI] was negligible," he told CBC News, adding that a computer glitch underestimated the consumer price index by about 0.1 per cent between early 2001 and March 2006.

That problem has now been fixed, he said.

The CPI is one of the most important economic indicators used by Canada's decision-makers.

The Bank of Canada uses it to set interest rates. Labour unions use it to calculate wages and many divorced parents use it to calculate child support and alimony payments.

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It is not known whether the error affected these calculations. But Harchaoui said the impact would have been barely noticeable once the CPI figures were mixed in with other economic indicators.

Harchaoui's staff have gone through all of their CPI methodology and computer programs, and found that the computer glitch affected their calculations in only the one area.

"We have instituted a series of evaluations [of Statistics Canada methodology] over the past five years," Harchaoui said. "Fortunately, the problem was limited to the travel sector."

Harchaoui said the agency's economists did not notice the problem because the tourist industry has gone through many changes over the past five years. Terrorist attacks, the rising value of the dollar and changes in consumer habits have all affected the industry, and the prices that are charged for hotel and motel rooms.

With all those other changes, Statistics Canada did not notice that its computers were getting the numbers wrong.

While the computer glitch has caused considerable embarrassment for Statistics Canada, Harchaoui said it has not affected the agency's reputation.

"The IMF [International Monetary Fund] audited several Western countries and found the CPI to be one of the best in the world," he said.

But he acknowledged that any statistical survey will contain some inaccuracies, due to human error, miscalculations or faulty data collection.

That was an opinion shared by users of the Statistics Canada data.

"I think it will raise more questions," Doug Porter, a senior economist at BMO Nesbitt Burns Inc., told CBC Radio. But he said he continues to believe the CPI is accurate and that Statistics Canada does a good job of tracking it.

"I still think it's the best measure of inflation we have," he said.

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HOME V for Vendetta - R for Reality Canadian Bird Flu Pandemic Looming ? Shill of the Week: Stephan Harper Aspartame: The Sweetest Killer Chicken Little Terrorist of the Week: Creating Fake Terrorists Shill of the Week: Paul Martin The Number 1 Reason YOU became a Slave	StatsCan admits to five years of CPI mistakes CBC News August 17, 2006 Statistics Canada is double-checking its computer programs after discovering that a computer glitch understated the nation's inflation rate for the past five years. But Tarek Harchaoui, assistant director of the agency's CPI division, said Wednesday that the problems were limited to one small part of the CPI, the price of hotel and motel rooms. "The impact [on the total CPI] was negligible," he told CBC News, adding that a computer glitch underestimated the consumer price index by about 0.1 per cent between early 2001 and March 2006. That problem has now been fixed, he said. The CPI is one of the most important economic indicators used by Canada's decision-makers. The Bank of Canada uses it to set interest rates. Labour unions use it to calculate wages and many divorced parents use it to calculate child support and alimony payments. Read the full article here Article Continued... It is not known whether the error affected these calculations. But Harchaoui said the impact would have been barely noticeable once the CPI figures were mixed in with other economic indicators. Harchaoui's staff have gone through all of their CPI methodology and computer programs, and found that the computer glitch affected their calculations in only the one area. "We have instituted a series of evaluations [of Statistics Canada methodology] over the past five years," Harchaoui said. "Fortunately, the problem was limited to the travel sector." Harchaoui said the agency's economists did not notice the problem because the tourist industry has gone through many changes over the past five years. Terrorist attacks, the rising value of the dollar and changes in consumer habits have all affected the industry, and the prices that are charged for hotel and motel rooms. With all those other changes, Statistics Canada did not notice that its computers were getting the numbers wrong. While the computer glitch has caused considerable embarrassment for Statistics Canada, Harchaoui said it has not affected the agency's reputation. "The IMF [International Monetary Fund] audited several Western countries and found the CPI to be one of the best in the world," he said. But he acknowledged that any statistical survey will contain some inaccuracies, due to human error, miscalculations or faulty data collection. That was an opinion shared by users of the Statistics Canada data. "I think it will raise more questions," Doug Porter, a senior economist at BMO Nesbitt Burns Inc., told CBC Radio. But he said he continues to believe the CPI is accurate and that Statistics Canada does a good job of tracking it. "I still think it's the best measure of inflation we have," he said. Broken Link? If the link to the original article is broken or has been altered you can view the article by clicking the "Expand/Collapse" button below. About KDR \| \| Home \| \| Weekly Features Archive	Weekly Features Archive
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