Bargaining Research
 

HOW TO USE THE CPI: EXAMPLES

To calculate the impact of inflation on your wages, you will need the Ontario CPI index number for the month of your last wage increase and the most recent Ontario CPI number. Remember to use the CPI index charts and not the percentage change charts for these calculations. (These are available on this website by clicking here )

For these examples, let us assume that your hourly wage is $21.00 and your last wage increase took effect on April 1, 2010. You then use the most recent CPI index number for Ontario, which in this example is January 2012.

For the province of Ontario, the CPI (2002 = 100 base) in April 2010 was 115.7 and the CPI for January 2012 was 120.6.

1. To calculate how much price inflation has taken place between these two points in time, use this formula:

(New CPI minus Old CPI) divided by Old CPI times 100

In this example,

((120.6-115.7) ÷ 115.7) × 100 = 4.2%

In greater detail this is calculated as follows:

Step 1: 120.6 minus 115.7 equals 4.9

Step 2: 4.9 divided by 115.7 equals 0.04235

Step 3: 0.04235 times 100 equals 4.2% rounded to one decimal place

Therefore, inflation between April 2010 and January 2012 grew by 4.2%.

2. To calculate the value of your wage in current dollars, use this formula:

Your wage times Old CPI divided by New CPI

In this example,

($21.00 × 115.7) ÷ 120.6 = $20.15

or, in greater detail this is calculated as follows:

Step 1: $21.00 times 115.7 equals 2429.7

Step 2: 2429.7 divided by 120.6 = $20.15

Therefore, your wage of $21.00, established in April 2010 is worth $20.15 today.

(Another way of stating this is to say that your wage in January 2012 is only 96% of what it was in April 201, in current dollars. We get this percentage by dividing the old CPI by the new CPI: 115.7 ÷ 120.6 = 0.95936 or roughly 96%.)

For more information on the Consumer Price Index, please download the Statistics Canada publication, Your Guide to the Consumer Price Index, or contact the OPSEU Research Staff at 1-800- 268-7376.

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