and measured inflation measurement issue 1 : representativeness of the cpi consumption basket one explanation for this gap is that consumers may not feel that the cpi consumption basket represents the goods and services they consume. in other words, they may feel that their consumption basket is different from the average. or they may think their own purchases have risen in price by more than those in the cpi basket. in particular, the csce found that certain groups of consumers perceive an inflation rate materially higher than what statistics canada reports. 8 for more information, see c. a. sims, “ chapter 4 : rational inattention and monetary economics, ” handbook of monetary economics 3 ( 2010 ) : 155 – 181. - 7in our joint research with statistics canada, we explored this discrepancy by constructing the consumption basket and inflation rate for different groupings of households, based on income, education, age and renters versus owners. our general finding is that the inflation rates constructed for specific consumer groupings are similar to the measured cpi inflation rate. 9 simply put, the perceptions of these groups were not consistent with our results. to illustrate this point, let ’ s take age as an example. we constructed different cpi baskets for young, middle - aged and senior households and calculated inflation rates for each group ( chart 4 ). the results show that, regardless of the different composition of their baskets, each age group ’ s average inflation rate tracked very closely to actual, measured cpi. 10 chart 4 : household - level inflation by age group is very similar year - over - year percentage change % 2015q1 source : statistics canada 2016q1 2017q1 2018q1 2019q1 household - level inflation, ages 18 – 30 household - level inflation, ages 31 – 54 household - level inflation, ages 55 + household - level inflation, all ages 2020q1 last observation : 2020q1 taking this analysis further, let ’ s go back to the perceptions reported in the csce for each age group. chart 5 clearly shows that younger consumers have much higher and more volatile inflation expectations than the two other age groups, and certainly higher than the measured rate. 9 while this finding generally holds, low income households and renters have experienced a modestly lower rate of inflation compared with the average canadian household over the last five years ( on average about 0. 2 percentage points ). the lower inflation rate for these groups can be explained by the fact that they spend a larger share of their basket on rent but a smaller

changes, and so we can get a better read on what is cyclical and what is structural. prime - age and young workers are those who remain underemployed, while the contribution of older workers to the labour gap is close to zero ( chart 3 ). another measure we use is the labour market indicator ( lmi ), which we started publishing on a regular basis this year. this indicator shows that the overall labour market has more room in the parlance of the 1960s and 1970s, we are seeing a divergence from okun ’ s law, which holds there is a negative statistical relationship between growth and unemployment. okun ’ s law is named for economist arthur okun who, in the early 1960s, showed that in the united states, unemployment tended to fall by 1 percentage point for every three percentage point rise in gdp. t. macklem, “ information and analysis for monetary policy : coming to a decision, ” bank of canada review ( summer 2002 ) : 11 – 18. monthly net job creation was about 10, 000 in 2014, roughly 3, 500 lower than what would be consistent with growth in potential. the integrated framework ( if ) is based on the growth - accounting framework that decomposes potential gdp into contributions coming from trend labour input ( hours worked ) and trend labour productivity ( output per hour worked ). on the trend labour input side, the if uses an empirical model that largely depends on demographic developments, as well as other factors such as school enrolment and disincentives linked with employment insurance. on the trend labour productivity side, the approach links the capital stock with investment to identify trend capital deepening and uses a combination of filters and detailed analysis of variables such as investment in machinery and equipment and research and development to estimate trend total factor productivity. l. pichette, p. st - amant, b. tomlin and k. anoma, “ measuring potential output at the bank of canada : the extended multivariate filter and the integrated framework, ” discussion paper no. 2015 – 1, bank of canada, january 2015. the estimate of 270, 000 jobs corresponds to approximately 1. 5 per cent of the bank ’ s structural estimate of trend employment in 2014q4. bis central bankers ’ speeches for improvement than the headline unemployment rate would suggest. 8 the unemployment rate is currently close to its post - recession low of about 6 1 / 2 per cent, while the lmi has fluctuated in a narrow range