Inflation in Canada Steady at 2.1% August 2014
Stats Canada on Friday announced the monthly and yearly Consumer Price Index (aka Inflation) numbers for August, and overall you think it’s not that bad as the CPI is running at 2.1% (12 months previous to August 2013), which matches the same year over year number for July, but, should we be celebrating? As usual with these numbers, the devil is in the details.
Even that graph starts to make you think that things are just fine, but again, you need to peel the onion to truly appreciate the horrible smell underneath (not to give onions a bad name). The first layer of the onion would tell you this:
Shelter costs rose 2.8% in August compared with the same month a year earlier. This increase followed a 3.0% gain in July. Natural gas prices increased 17.9% on a year-over-year basis in August, after rising 20.4% the previous month. Consumers also paid more for homeowners’ home and mortgage insurance.
Natural Gas prices up almost 18% year over year? Holy crap! That is how I heat my house, and heat my water, and now it costs a hell of a lot more than last year? More for Home and Mortgage Insurance, as well is no surprise, but I hope it is not a price gouge attempt (like the Natural Gas industry is enjoying).
The household operations, furnishings and equipment index rose 3.0% on a year-over-year basis in August, led by a 7.6% increase in the cost of telephone services. In addition, the cost of Internet access services rose in the 12 months to August.
Are telephone costs rising as well as Internet access prices rising? No big surprise there given the monopolies in Canada (no mention of Cable TV costs, wonder where those line up on the list).
Bank of Canada’s core index
This is the one that the Bank of Canada looks at closely when it decides nasty things like whether interest rates should go up or not.
The Bank of Canada’s core index advanced 2.1% in the 12 months to August, after increasing 1.7% in July.
On a year-over-year basis, prices for some of the components included in the core index, such as telephone services and the purchase of passenger vehicles, increased more in August than in July. Movements in these indexes have a larger impact on the core index than on the All-items CPI because certain components are excluded from the core index.
At the same time, prices for gasoline, fresh fruit, fresh vegetables and natural gas, which are excluded from the core index, decelerated on a year-over-year basis in August.
That last line in bold is quite interesting, isn’t it? the Bank of Canada doesn’t count Gasoline, Fresh Fruit and vegetables or Natural Gas in their Index? Interesting.
Prices Big Table
One of my favourite of the big tables in the report is the one that goes by component (seasonally adjusted):
Consumer Price Index and major components Seasonally adjusted1
| June 2014 | July 2014 | August 2014 | June to July 2014 |
July to August 2014 |
|
|---|---|---|---|---|---|
| (2002=100) | % change | ||||
| All-items Consumer Price Index (CPI) |
125.6 | 125.5 | 125.6 | -0.1 | 0.1 |
| Food | 136.0 | 135.8 | 135.5 | -0.1 | -0.2 |
| Shelter | 132.2 | 132.6 | 132.4 | 0.3 | -0.2 |
| Household operations, furnishings and equipment |
116.3 | 116.3 | 117.8 | 0.0 | 1.3 |
| Clothing and footwear | 93.5 | 93.5 | 93.1 | 0.0 | -0.4 |
| Transportation | 132.2 | 131.4 | 131.3 | -0.6 | -0.1 |
| Health and personal care | 118.8 | 119.1 | 119.2 | 0.3 | 0.1 |
| Recreation, education and reading | 107.5 | 107.5 | 107.8 | 0.0 | 0.3 |
| Alcoholic beverages and tobacco products | 146.7 | 147.1 | 148.4 | 0.3 | 0.9 |
| Special aggregates | |||||
| Core CPI2 | 123.2 | 123.3 | 123.6 | 0.1 | 0.2 |
| All-items CPI excluding food and energy3 | 119.1 | 119.2 | 119.6 | 0.1 | 0.3 |
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
Previous Rants About Inflation
- Food Inflation at 5.4% for October 2023, better but still rising
- Grocery Inflation in Canada at 8.5% in July in 2023, doesn’t look like things are getting much better.
- June 2023 Inflation was at 2.8% but Groceries were at an astronomical 9.1%.
- In 2022 Inflation at 7.7% May 2022 in Canada was near the high point of things.
- Inflation at 6.7% March 2022 in Canada goodness that was a bit of a jump?
- Inflation 4.4% September 2021 shows that this started a while ago.
- Looks like COVID leads to Inflation in August 2021 ?
- I talked about this in April of 2021, didn’t think it was going to get this bad, this fast.
- Inflation at 2011 levels ? OK, so I have even written this title before? Yes, I need more imagination.
- Bank in 2017 Inflation Still Under 2 Pct (for now) so things were OK back then too.
- Previously I have written a lot about inflation, here is a small taste. Note the snappy titles.
- The year was 2016
- Shocking Electricity Price in August (CPI Canada)
- Electricity Prices Continue to Sizzle in July
- Zap! Electricity Prices Pushes Inflation in June
- Expensive Food and Shelter in April in Canada
- Good Food Still Is Not Cheap in Canada (Inflation for March)
- Food Prices Continue to Rise for February
- Veggies up 18.2 pct in Canada
- Now for 2015
- The year was 2016
And that is just scratching the surface.
I wonder if we’d get a more accurate rate of inflation if they “unhooked” it from what they use to increase fixed income payments and to increase RRSP contribution limits etc. Right now if they used “real” inflation they’d have to boost CPP and some other things quite a bit.
It’s certainly worth tracking your “personal” rate of inflation if you’re trying to more accurately forecast what you’ll need for retirement income.
Yes, the fact that vegetables, fruit and meat are much more expensive, yet CPP payments are staying the same, cannot be good news for those on fixed incomes.
It’s still expensive for Average Joe and Jane out there. We have wage deflation which never gets mentioned much, plant closures and corporations cutting staff. Every day you hear of more and more. Wait until 3G Capital takes out the wacking stick to Tim Hortons. It’s also amusing to think we’re getting a good deal on gas @ $1.17 per litre. Expensive but not as expensive as it was year over year. Markets continue to rocket higher and interest rates are at generational lows. Until we see rate tightening this party will continue for those who have the means and capital to invest. Sadly most don’t, their more worried about job loss. 51% of Canadians just admitted they couldn’t miss a paycheque or they’d end up in the ditch. In spite of the rosy numbers and forecasts the greatest fear out there is job loss.
Yeh the CPI seems to be a little bit of “smoke and mirrors” for the government to play with and say, “Things aren’t so bad”