Friday Stats Canada announced their Monthly Consumer Price Index numbers for July 2011 and the year ending July 2011, and while the numbers are better than they have been, they still continue to run high enough to make policy makers scratch their heads about whether it will be time to act on them (soon).
There is some accounting changes now that the HST is a year old (yea?!?) and the Nova Scotia tax increase is a year old as well (the comparison is apples to apples again), but the relatively stable gas prices seems to be the major reason the inflation rate is lowering some over the past couple of months. This may change with the coming of the fall and folks going back to school, but for now, the rate stands at 2.7% year over year ending in July 2011.
As usual the authors of the report point out the role that food and energy had in these numbers:
Energy prices advanced 12.9% during the 12 months to July, following a 15.7% increase in June. On a year-over-year basis, gasoline prices rose 23.5%, compared with the 28.5% gain in June. In contrast, natural gas prices fell.
Food prices rose 4.3% in the 12 months to July, matching the increase in June.
Excluding food and energy, the Consumer Price Index (CPI) increased 1.2% in the 12 months to July, after advancing 1.4% in June.
So we see a slowing of the price increases, but prices are still going up.
Can this all cause a reaction by our friends at the Bank of Canada? My hypothesis is not yet, given how completely buggered up the world economic picture is, if Canada jumps their interest rates, we’ll have a sudden influx of money and a spike in the Canadian Dollar that will kill the Canadian Manufacturing Sector. This is only my opinion, and I have been wrong before and will be wrong again (so please do not act on this statement without checking with professionals).
What is the Bank of Canada counting?
The Bank of Canada’s core index advanced 1.6% in the 12 months to July, following a 1.3% gain in June.
On a month-over-month basis and before seasonal adjustment, the core index increased 0.2% in July after decreasing 0.6% in June.
So the numbers are lower if you count like the Bank of Canada, but what is coming down the pipe in terms of Market Upheavals could mean decisions may be made with other concepts in mind.
The Big Table
As my regular readers know, I love to publish some of the Big Tables that Stats Canada publishes monthly as well, and here is the one to look at closely:
Consumer Price Index and major components, Canada – Not seasonally adjusted
| Relative importance¹ | July 2010 | June 2011 | July 2011 | June to July 2011 | July 2010 to July 2011 | |
|---|---|---|---|---|---|---|
| % | (2002=100) | % change | ||||
| All-items CPI | 100.00² | 116.8 | 119.8 | 120.0 | 0.2 | 2.7 |
| Food | 15.99 | 123.7 | 128.3 | 129.0 | 0.5 | 4.3 |
| Shelter | 27.49 | 124.3 | 125.4 | 125.9 | 0.4 | 1.3 |
| Household operations, furnishings and equipment | 11.55 | 109.2 | 110.7 | 110.7 | 0.0 | 1.4 |
| Clothing and footwear | 5.31 | 88.8 | 90.4 | 89.7 | -0.8 | 1.0 |
| Transportation | 20.60 | 117.4 | 125.5 | 125.0 | -0.4 | 6.5 |
| Health and personal care | 4.95 | 115.6 | 116.9 | 116.7 | -0.2 | 1.0 |
| Recreation, education and reading | 11.20 | 105.1 | 106.0 | 106.8 | 0.8 | 1.6 |
| Alcoholic beverages and tobacco products | 2.91 | 134.5 | 135.6 | 136.1 | 0.4 | 1.2 |
| Special aggregates | ||||||
| Core CPI³ | 82.15 | 115.5 | 117.1 | 117.3 | 0.2 | 1.6 |
| All-items CPI excluding energy | 89.92 | 115.0 | 116.8 | 117.0 | 0.2 | 1.7 |
| Energy | 10.08 | 139.8 | 157.0 | 157.9 | 0.6 | 12.9 |
| Gasoline | 5.80 | 147.8 | 183.5 | 182.5 | -0.5 | 23.5 |
| All-items CPI excluding food and energy | 73.93 | 113.0 | 114.3 | 114.3 | 0.0 | 1.2 |
| Goods | 47.80 | 109.1 | 112.8 | 112.9 | 0.1 | 3.5 |
| Services | 52.20 | 124.5 | 126.8 | 127.1 | 0.2 | 2.1 |
There is no doubt that life is becoming more expensive. And, I don’t know about you, but my wages are not keeping up.
Thanks mostly to oil and food prices, there is inflation. Oil affects all transportation for all products and services.
Not much else matters, really.