As usual our Friends at Stats Canada published a mixed bag of news with their CPI Report for September 2012, however the CPI (inflation) is back down to low(er) levels at 1.2%, even with food prices and energy prices fluctuating a great deal over the past few months.
Consumer prices rose 1.2% in the 12 months to September, matching the increase in August. Higher energy prices, particularly for gasoline and electricity, led the advance in the Consumer Price Index (CPI) for September. This was tempered by lower year-over-year price increases for the purchase of passenger vehicles and for food purchased from stores.
So inflation is remaining at a stable rate, however, remember that is simply saying that prices are increasing at the same rate (not the prices are not rising).
Energy prices again were the culprit last month for a year over year inflation increase, as Energy prices increased (year over year) by 2.9% which while small(ish) is still twice the inflation level. Gas prices certainly have been all over the place in Ottawa, but they are back down to $1.20 for now (after a big jump around the long weekend, what an interesting coincidence).
The preceding graph is important to look at and think about. Energy prices also have a nasty effect of rippling into other price increases (since energy rolls into transportation for food and other products). What parts of energy are increasing?
Gasoline prices rose 4.7% in the 12 months to September, following a 2.2% gain the previous month. Compared with August, higher year-over-year price increases for gasoline were recorded in eight provinces, most notably in the Atlantic region.
The cost of electricity rose 6.0% year over year in September after rising 3.4% in August. Increases in Ontario and Alberta continued to lead the rise at the national level.
Yikes, is all I can say to that one. I must admit my electrical bill has been growing steadily for the past few years, and Ontario Hydro promises me that trend will continue, yea?!?
This is important to have, as it points out that the CPI measurement is the cost of a basket of goods, that at the start of the index was at 100, and you see the steady increase in cost over time.
Bank of Canada’s core index
These numbers are very important, but of even more significance is how the Bank of Canada measures inflation, as this is the data they will use to decide whether interest rates need to rise or not:
The Bank of Canada’s core index rose 1.3% in the 12 months to September, following a 1.6% increase in August. The slower rate of increase was mostly attributable to smaller price increases for the purchase of passenger vehicles.
So the Bank still has little reason to increase interest rates due to inflation (for now).
The Big Table
Remember that the Stats Canada site has a plethora of really interesting statistics, so go read them and see where all the “talking heads” on TV base their interpretations of where we stand on inflation in Canada.
Consumer Price Index and major components, Canada – Not seasonally adjusted
| Relative importance | Sept 2011 | August 2012 | September 2012 | August to Sept 2012 | Sept 2011 to Sept 2012 | |
|---|---|---|---|---|---|---|
| % | (2002=100) | % change | ||||
| All-items Consumer Price Index (CPI) | 100.002 | 120.6 | 121.8 | 122.0 | 0.2 | 1.2 |
| Food | 15.99 | 128.2 | 131.7 | 130.3 | -1.1 | 1.6 |
| Shelter | 27.49 | 125.7 | 127.4 | 127.2 | -0.2 | 1.2 |
| Household operations, furnishings and equipment | 11.55 | 111.6 | 112.7 | 113.2 | 0.4 | 1.4 |
| Clothing and footwear | 5.31 | 95.0 | 89.5 | 93.3 | 4.2 | -1.8 |
| Transportation | 20.60 | 126.3 | 127.5 | 128.3 | 0.6 | 1.6 |
| Health and personal care | 4.95 | 117.5 | 119.8 | 118.5 | -1.1 | 0.9 |
| Recreation, education and reading | 11.20 | 106.9 | 107.6 | 107.7 | 0.1 | 0.7 |
| Alcoholic beverages and tobacco products | 2.91 | 135.9 | 137.8 | 137.7 | -0.1 | 1.3 |
| Special aggregates | ||||||
| Core CPI3 | 82.15 | 118.4 | 119.7 | 119.9 | 0.2 | 1.3 |
| All-items CPI excluding energy | 89.92 | 117.8 | 118.8 | 118.9 | 0.1 | 0.9 |
| Energy4 | 10.08 | 156.0 | 159.2 | 160.6 | 0.9 | 2.9 |
| Gasoline | 5.80 | 180.4 | 184.9 | 188.8 | 2.1 | 4.7 |
| All-items CPI excluding food and energy | 73.93 | 115.5 | 116.0 | 116.4 | 0.3 | 0.8 |
| Goods | 47.80 | 113.5 | 114.0 | 114.2 | 0.2 | 0.6 |
| Services | 52.20 | 127.8 | 129.6 | 129.8 | 0.2 | 1.6 |
Thank you for providing such a detailed information. I live in the USA and consumer energy and deregulation is a moving topic as state by state is being deregulated