After a blur of a weekend I get to comment on the fact that after all the gloom and doom about the resurrection of Inflation and thus the most likely kick up of Interest Rates because of it, the CPI for March 2010 came in (on Friday) and the numbers are better than expected? Just goes to show that no one is ever right all the time (just ask a weather man).
No we are not in a deflationary cycle, however last month the CPI was up 1.6% year over year and for March it is only 1.4%? Not too bad really, but again, Gasoline seems to be the major culprit (again).
Bank of Canada Core
The more important set of number is of course the Bank of Canada’s index and how it did, and we see:
The Bank of Canada’s core index advanced 1.7% over the 12 months to March, following a 2.1% rise in February. March’s increase was due primarily to a rise in prices for the purchase of passenger vehicles, passenger vehicle insurance premiums, property taxes, and food purchased from restaurants.
This is an even bigger slowing than for regular CPI, so what will this cause the Bank of Canada to do? My guess is they may still kick up interest rates but maybe only 25 basis points? I don’t think they will do nothing, as they have been blustering about change for far too long to do nothing.
The Really Big Table
Care to see which components contributed the most? Have a look at the big table:
| Relative import1 | March 2009 | Feb
2010 | March 2010 | Feb to March 2010 | Mar 2009 to Mar 2010 | |
|---|---|---|---|---|---|---|
| Unadjusted | ||||||
| % change | ||||||
| All-items | 100.002 | 114.0 | 115.6 | 115.6 | 0.0 | 1.4 |
| Food | 17.04 | 121.5 | 122.7 | 123.1 | 0.3 | 1.3 |
| Shelter | 26.62 | 122.6 | 121.8 | 121.7 | -0.1 | -0.7 |
| Household operations, furnishings and equipment | 11.10 | 106.8 | 108.3 | 108.3 | 0.0 | 1.4 |
| Clothing and footwear | 5.36 | 95.7 | 91.2 | 93.6 | 2.6 | -2.2 |
| Transportation | 19.88 | 110.5 | 116.7 | 117.1 | 0.3 | 6.0 |
| Health and personal care | 4.73 | 110.5 | 113.7 | 113.5 | -0.2 | 2.7 |
| Recreation, education and reading | 12.20 | 101.8 | 104.1 | 102.5 | -1.5 | 0.7 |
| Alcoholic beverages and tobacco products | 3.07 | 129.7 | 131.4 | 131.5 | 0.1 | 1.4 |
| All-items (1992=100) | 135.7 | 137.6 | 137.7 | 0.1 | 1.5 | |
| Special aggregates | ||||||
| Goods | 48.78 | 107.6 | 108.5 | 109.0 | 0.5 | 1.3 |
| Services | 51.22 | 120.4 | 122.6 | 122.2 | -0.3 | 1.5 |
| All-items excluding food and energy | 73.57 | 111.1 | 112.4 | 112.1 | -0.3 | 0.9 |
| Energy | 9.38 | 127.1 | 132.3 | 134.5 | 1.7 | 5.8 |
| Core CPI3 | 82.71 | 113.1 | 115.2 | 115.0 | -0.2 | 1.7 |
