The Consumer Price Index (CPI) is an indicator of the changes in consumer prices that are experienced by a target population. The CPI measures price change by comparing, through time, the cost of a fixed basket of commodities. The basket is based on the expenditures of a target population in a certain reference period. Since the basket contains commodities of unchanging or equivalent quantity and quality, the index reflects only pure price movement.The CPI basket requires periodic updating. This is done to take into account changes that take place in the purchasing patterns of the population. The present update introduces the 2005 basket of consumer goods and services into the CPI. To preserve continuity, the CPI series based on the 2005 basket are linked to the previous series in April 2007.The Consumer Price Index Reference Paper provides the conceptual and methodological basis on which the Canadian CPI is constructed. It provides information, for example, about the formula which is used to calculate the CPI, the geographical, population and product coverage of the index, the practice of updating and linking the various baskets over time, and the problem areas of the index as well as the solutions used to overcome these difficulties. Furthermore, the document discusses other relevant issues related to the CPI such as the sample size and the source of the price observations, the expenditure weights that are used as well as their compilation and sources.