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A new study says the official inflation rate is underplaying the financial stress being felt by families with children.

Statistics Canada’s consumer price index is a carefully built gauge of the changing cost of a broad mix of goods and services for the whole population. It’s natural for individuals to feel their own cost of living isn’t fully reflected by the CPI, which has been tame for the better part of a decade.

Do CPI skeptics have a case? A University of New Brunswick study suggests that households with children experienced persistently higher living costs than those reported in the CPI since 2009. Zeroing in on Ontario, the study found an inflation rate of nearly 10 per cent for households with children between 2010 and 2015, compared to an official CPI of just below 2 per cent.

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The underlying issue here is energy prices, notably gasoline. While the cost of gas has been up and down since the most recent recession, there have been many instances where rising prices have created a high inflation rate for households that do a lot of driving. Families with children that live in the suburbs and commute to the city are a big part of this, said professor Herb Emery, co-author of the study along with Xiaolin Guo.

In fact, the study is a warning to young couples who buy homes in the suburbs to take advantage of cost savings that were documented in a recent column as being as high as 25 per cent. “When you start to make commuting more expensive, it’s effectively raising the mortgage cost on that house you bought out in the boonies,” Prof. Emery said.

He says gas prices for the long-distance commuter are a lot like a variable-rate mortgage, where costs vary according to gasoline prices. Big gas-price declines in 2014 and 2015 helped lighten the cost burden, but the trend until just recently has mostly been upward.

In the past six months, the average cross-Canada price for regular gas went from a low of about $1 a litre to a high reached late last month of about $1.32. But while the gasoline component of the CPI jumped 10 per cent from March to April, the all-items CPI rose 0.4 per cent.

This discrepancy is explained by the small weighting gas has in the overall CPI. Gas would have a bigger weighting for someone who does a lot of driving.

Prof. Emery’s research suggests families with children have higher inflation rates compared with the CPI in provinces across the country. “A lot of this group is the one that the federal Liberals have been catering to, saying the middle class is falling behind,” he said.

The financial health of the middle class is bound to be an issue in the federal election campaign coming this fall. But what can politicians actually do to address the problem? The Liberals introduced the Canada Child Benefit, which has been credited with reducing child poverty, and they modestly lowered taxes on middle earners.

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The previous Conservative government used a different child benefit and offered tax breaks such as income splitting for families where one parent worked and another stayed home. But while the economy has performed well according to some indicators, financial stress is still being felt by many people.

An article I wrote recently about financial stress noted that median wage growth was below the inflation rate last year and has been slowing since the 2008-09 financial crisis. If the actual inflation rate for a particular individual is higher than the official rate, it means they’re falling even farther behind than previously thought.

Expect no help from the economy via strong growth that pushes wages higher. In fact, financial markets are acting these days like the economy is going to get worse, not better.

This means it’s up to individuals to recognize financial stress points. Example: Living in the suburbs and making long commutes will give you a higher inflation rate than other people if gas prices rise. Hybrid or electric vehicles, anyone?

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