In February 2014 our friends at Stats Canada put out their monthly Consumer Price Index report for February 2014, and year-over-year Inflation was running at a low-ish 1.1%, which is not likely to trigger any kind of reaction from the Bank of Canada (at least it shouldn’t).
This month gasoline helped keep the index down, but how much longer will that work? Gas is back up to $1.30 in Ottawa, and the big “kick in the lower abdomen” will be Enbridge’s 40% Natural Gas jump and Ontario’s Hydro price jumps too.
How much has Gasoline prices jumped around in the past little while, have a look at this graph, and note the index on the left. Those are some wild price swings:
The weird part of that graph is the way prices changes are not increasing slowly they slash up and down at an alarming rate.
The scary thing to look at is food prices, to quote our Stats Canada amigos:
Prices for food purchased from stores increased 1.0% on a year-over-year basis, led by higher prices for fresh fruit (+7.5%) and meat (+2.1%). In contrast, prices for dairy products, sugar and confectionery as well as fruit juices declined in February. Prices for food purchased from restaurants increased 1.1%.
Given the problems with the weather in North America, Fresh Fruit prices sky rocketing is to be expected, but it isn’t appreciated.
If we started at 2002 as a start where sits the CPI now, 12 years later? This graph will help you with that:
Not exactly hyper-inflation.
The Big Table
As usual, I include one of the big tables from the report showing the parts of the basket that is the CPI:
Table 1
Consumer Price Index and major components, Canada Not seasonally adjusted
|
Relative importance1 |
February 2013 |
January 2014 |
February 2014 |
Jan |
Feb 2013 | |
|
% |
(2002=100) |
% change | ||||
| All-items Consumer Price Index (CPI) |
100.002 |
122.7 |
123.1 |
124.1 |
0.8 |
1.1 |
| Food |
16.60 |
132.9 |
133.0 |
134.3 |
1.0 |
1.1 |
| Shelter |
26.26 |
127.9 |
130.5 |
130.7 |
0.2 |
2.2 |
| Household operations, furnishings and equipment |
12.66 |
114.3 |
114.7 |
115.3 |
0.5 |
0.9 |
| Clothing and footwear |
5.82 |
91.4 |
89.2 |
91.0 |
2.0 |
-0.4 |
| Transportation |
19.98 |
130.3 |
129.2 |
130.8 |
1.2 |
0.4 |
| Health and personal care |
4.93 |
118.6 |
118.3 |
118.4 |
0.1 |
-0.2 |
| Recreation, education and reading |
10.96 |
104.7 |
104.7 |
106.4 |
1.6 |
1.6 |
| Alcoholic beverages and tobacco products |
2.79 |
139.4 |
140.9 |
142.9 |
1.4 |
2.5 |
| Special aggregates | ||||||
| Core CPI3 |
84.91 |
120.6 |
121.3 |
122.1 |
0.7 |
1.2 |
| All-items CPI excluding energy |
91.44 |
119.7 |
120.1 |
121.0 |
0.7 |
1.1 |
| Energy4 |
8.56 |
160.1 |
160.2 |
162.6 |
1.5 |
1.6 |
| Gasoline |
4.62 |
186.1 |
179.5 |
183.7 |
2.3 |
-1.3 |
| All-items CPI excluding food and energy |
74.85 |
116.9 |
117.3 |
118.2 |
0.8 |
1.1 |
| Goods |
48.18 |
115.2 |
114.2 |
115.6 |
1.2 |
0.3 |
| Services |
51.82 |
130.1 |
131.9 |
132.5 |
0.5 |
1.8 |
1.2011 CPI basket weights at January 2013 prices, Canada, effective February 2013. Detailed weights are available under the Documentation section of survey 2301 (www.statcan.gc.ca/imdb-bmdi/2301-eng.htm).
2. Figures may not add up to 100% as a result of rounding.
3. The Bank of Canada’s core index excludes eight of the CPI’s most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies) as well as the effects of changes in indirect taxes on the remaining components. For additional information on the core CPI, consult the Bank of Canada website (www.bankofcanada.ca/rates/indicators/key-variables/inflation-control-target/).
4. The special aggregate “Energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.
Inflation in 2014
How did Inflation go in 2014?
- Gas Prices Drive Down Inflation in December 2014 to 1.5%
- Low Gas Prices puts Inflation at 2.0% In November
- Inflation Stays High Despite Lower Gas in October
- Inflation at 2.1 for August in Canada
- Inflation Stays up in June 2014 in Canada
- Who said Inflation ? CPI Up in Canada
- CPI Jumps to 2.0 in April 2014 in Canada
- Inflation Jumps in March 2014
- Inflation at 1.1%, That is Low for February
- CPI Up A Little to Start 2014 in Canada
- Christmas CPI Data Ho Ho Ho
Utilities are a big concern these days with the mess of hydro and the 40% Natural Gas hike coming. All you can counteract them with is to spend less in other areas or increase debt, which I wouldn’t recommend.
Many people suggest raising taxes on fossil fuels to reduce usage and therefore greenhouse gas emissions. I’m not sure that would work much because I don’t see a huge drop in consumption of gasoline even at 1.30+ nor do I see a run on more energy efficient homes despite the nasty winter and consequent increase in Nat Gas pricing. Higher energy costs just seem to result in more budgetary pain not in changed behaviour.