Very Low CPI but Gas is to Blame Again
December 2008 Consumer Price Index
Year over year, the adjusted Consumer Price Index for December is 1.2%, which is back to the very low levels we have seen for the past few years. The month-over-month rate change is NEGATIVE at -0.7% (deflation?), which is also very interesting.
The major contributor to this drop in rate is, of course, gasoline (in fact, the CPI without gasoline adjustment is at about 2.6%, which is about the target for inflation, but plummeting Gas prices seem to be dragging the entire index down at a much higher rate.
A few highlights from the report:
Gasoline prices in December 2008 were 25.8% below levels in the same month the year before. This was the largest drop since the inception of the gasoline price index in 1949 and followed a 14.4% drop in pump prices in November....
...The most significant upward contributor was mortgage interest cost, despite a recent decrease in mortgage interest rates. Increasing prices for natural gas and various food items, particularly fresh vegetables and bakery and cereal products, also put significant upward pressure on consumer prices in December.
Given gas prices are starting to move back up slowly it may be that inflation may not stay as low as this, but given the market pressures it is not likely that other areas will increase much either, given the much lower consumer spending (demand) thanks to the Financial Apocalypse as well.
The Big Picture
The Big Picture
| . | Rel. import 2 | Indexes | Percentage change December 2008 from | ||||
|---|---|---|---|---|---|---|---|
| Dec 2008 | Nov 2008 | Dec 2007 | Nov 2008 | Dec 2007 | |||
| 2002=100 | |||||||
| All-items | . | 100.0 | 113.3 | 114.1 | 112.0 | -0.7 | 1.2 |
| Food | . | 17.0 | 119.8 | 119.5 | 111.7 | 0.3 | 7.3 |
| Shelter | . | 26.6 | 123.4 | 123.4 | 119.2 | 0.0 | 3.5 |
| Household operations, furnishings and equipment | . | 11.1 | 105.5 | 105.5 | 103.5 | 0.0 | 1.9 |
| Clothing and footwear | . | 5.4 | 91.3 | 94.1 | 93.7 | -3.0 | -2.6 |
| Transportation | . | 19.9 | 110.3 | 113.2 | 117.5 | -2.6 | -6.1 |
| Health and personal care | . | 4.7 | 109.9 | 110.1 | 107.7 | -0.2 | 2.0 |
| Recreation, education and reading | . | 12.2 | 101.2 | 101.9 | 101.2 | -0.7 | 0.0 |
| Alcoholic beverages and tobacco products | . | 3.1 | 128.7 | 128.5 | 126.2 | 0.2 | 2.0 |
| All-items (1992=100) | . | . | 134.9 | 135.8 | 133.3 | -0.7 | 1.2 |
| Special aggregates | |||||||
| Goods | . | 48.8 | 106.5 | 108.1 | 107.4 | -1.5 | -0.8 |
| Durable goods | . | 13.3 | 89.5 | 90.2 | 92.9 | -0.8 | -3.7 |
| Semi-durable goods | . | 7.2 | 92.6 | 94.7 | 94.4 | -2.2 | -1.9 |
| Non-durable goods | . | 28.2 | 119.6 | 121.6 | 118.7 | -1.6 | 0.8 |
| Services | . | 51.2 | 120.1 | 120.0 | 116.5 | 0.1 | 3.1 |
| All-items excluding food | . | 83.0 | 112.0 | 113.0 | 112.0 | -0.9 | 0.0 |
| All-items excluding food and energy | . | 73.6 | 111.0 | 111.3 | 109.4 | -0.3 | 1.5 |
| All-items excluding energy | . | 90.6 | 112.6 | 112.8 | 109.8 | -0.2 | 2.6 |
| All-items excluding gasoline | . | 95.1 | 113.4 | 113.6 | 110.5 | -0.2 | 2.6 |
| All-items excluding shelter, insurance and financial services | . | 69.9 | 108.5 | 109.5 | 108.3 | -0.9 | 0.2 |
| Energy | . | 9.4 | 123.0 | 130.7 | 138.2 | -5.9 | -11.0 |
| All-items excluding alcoholic beverages, tobacco products and smokers' supplies | . | 96.9 | 112.7 | 113.5 | 111.4 | -0.7 | 1.2 |
| Core consumer price index (CPI) (Bank of Canada definition) 3 | . | 82.7 | 112.6 | 113.0 | 110.0 | -0.4 | 2.4 |
End of an Historic Week
A week of historic and momentous moments that we will all remember for a very long time.
- Interest rates in Canada are at 1% and might well drop to lower values, which is astounding, money is now effectively free (for the right borrowers).
- The most important thing this week is of course without a doubt a moment that will change history and that is the Arizona Cardinals making it into the Super Bowl. The Cardinals making the Super Bowl has reignited my hope that anyone can succeed.
- This week, we were inspired by Cardinals quarterback Kurt Warner. Twelve years ago, he was bagging groceries, but he went on to lead a team to the Super Bowl. Now, he’s guiding another team, one many doubted, toward football greatness.Kurt Warner is also a humble man and a giving man, who works tirelessly for charities as well.
- Oh and there was an inauguration this week too I think.
Consumer Price Index 2008
- Inflation was lower in January 2008: some better news to start the New Year?
- February 2008 Inflation was at 1.8%
- March 2008 Inflation dropped to 1.4%
- April 2008 CPI jumped to 1.8%, uh oh
- May 2008 and Inflation is at 2.2%? Ouch!
- June 2008 Inflation Jumped to 3.2% thanks to Gasoline!
- July 2008 CPI at 3.4%? Holy Moly!
- Inflation at 3.5% for August 2008 : Learn about the Consumer Price Index (CPI) data for August 2008. Gain insights into inflation rates and economic indicators.
- September 2008 saw CPI at 3.4% down a very slight amount.
- CPI drops to 2.6% in October 2008: CPI for that month seems to be getting better.
- Consumer Price Index at 1.2% to end 2008. Analyzing the December 2008 Consumer Price Index: Dive into the major factors affecting the CPI, including plummeting gas prices and deflation.
