Inflation at 2.1 for August in Canada

Inflation in Canada Steady at 2.1%

Stats Canada on Friday announced the monthly and yearly Consumer Price Index (aka Inflation) numbers for August, and overall you think it’s not really 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.

Inflation over Past Year

The 12-month change in the Canadian Consumer Price Index

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.

Telephone costs are rising as well as Internet access prices are 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 favorite 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
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
1. A seasonally adjusted series is one from which seasonal movements have been eliminated. Each month, the previous month’s seasonally adjusted index is subject to revision. On an annual basis, the seasonally adjusted values for the last three years are revised with the January data release. Users employing CPI data for indexation purposes are advised to use the unadjusted indexes. For more information on the availability and uses of seasonally adjusted CPI data, please see the Definitions, data sources and methods section of survey 2301 (
2.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, please consult the Bank of Canada website (
3.The special aggregate “energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.


The good news of the week is Master Big C8j (my son) has had the K-wires removed from his elbow/humerus, and is on the mend from his summer elbow destruction. The CHEO parking lot was a zoo thanks to a new enterovirus going around, and the ortho clinic was busy with 90 kids waiting for either a checkup or have their cast changed (or removed). Took a while to get it all done, but the folks at CHEO work hard for their money, I have no complaints, and am glad they are around.

Alibaba (the IPO) is happening today, and I am watching the whole sequence of events with great interest . I think I am prejudice against Chinese investments like this, but part of it is because I honestly have no idea how the Chinese “market” works, and due to this how can I buy into one of their “market leaders”? It’s like asking me who is the best Pakistani Cricketer (not to be derisive about Cricket, my Grandfather loved the game, I just never watched it), I have no idea, because I have no expertise in the area.

Union Jack

This Flag Might Have been a Little Less Blue, had the vote gone differently

I was saddened to read about Rob Ford’s cancer issues. While I have lampooned the man, and his Mayoral run, no one deserves Cancer and I wish him good luck in his fight (I am hoping his fighting spirit works in his favor in this battle).

Apple claims 4 million iPhone 6’s sold in the first 24 hours of sales, which is interesting, since I heard from my sources that the Canadian Apple store was down at 3:00 AM when the sales were supposed to start. Amazing what tech crazes cause normal folks to do, isn’t it? Also interesting to see that the NFC chip in the iphone 6 will only work with Apple Pay (initially).

I remember when Charles De Gaulle while visiting Edinburgh shouted, “Vive L’Écosse! Vive L’Écosse Libre!“, well maybe not, but it seems my kilt wearing brethren from up North voted to stay in the United Kingdom. Speaking as the son of a Welshman, Pob lwc! and thanks for all the new powers that Wales will inherit from this healthy public exchange! As was heard during the campaign, Free Scotland! (from the Scottish)…

My Writings for Week Ending September 19th

It is chilly and the leaves are changing colour here in Ottawa, and all the MP’s are back to do, whatever they do.

Scotia Bank Value Visa

[click to continue…]


RESP : What does $350 Look like ?

Continuing on with my discussions about the relative cost of school and such, I have found another interesting example for all of those parents out there that are wondering, “Should I start saving for my child’s post-secondary education ?”. I have already scratch this topic a little with, So That is What $50,000 looks Like, but read on, it will be entertaining.

University Costs for RESP

Those Two Books Cost $350.00
(the computer is not included in that price)

First, a question: What does $350 look like at University (or to a parent of a child who is at College/University) ? Look at the picture on the right hand side of this, those two books. Those two books represent $350 or so in costs (the computer on top of the books is a lot more).

Big deal, says you? Yes, maybe that isn’t that expensive, except those two books are for only 1 course, and in some programs like Engineering or Computer Science there can be many courses with many very high-priced texts. A good number to remember is typically programs have at least 5 courses per term, with two terms a year and a four-year program, you have about 40 course sections that could have some expensive books to buy (or even more interesting expensive lab fees).

More numbers for thought would be that the Basic CESG (grant for your RESP) for a year is $500 (if you have max’ed out your deposits to your child’s RESP), so these two books pretty much almost ate that whole grant.

Do you still think an RESP is something that can wait for when your child gets older?


Financially, it is never enough

Last week I was talking to an Insurance Agent about possibly changing my term insurance carrier, to see if I could get a lower rate, and (as usual) the conversation was not just about Term Insurance for guys over 50 (that was the topic I wanted to talk about), unfortunately the topic of retirement planning and insurance coverage to protect my family came up (no, I didn’t bring it up, you can guess who might be the protagonist in that part of the conversation).

Financial Despair

At the Signpost Up Ahead, you see you are entering… The Financial Despair Zone

I pointed out that I have a pension plan (a very good and generous plan) so my family was going to be OK, in terms of retirement planning, or were they? The agent I was speaking with pointed out that the Life Insurance that went with my pension wasn’t really that much and if I died, my wife would only get a fraction of the money in my pension.

This statement is entirely correct, but it still annoyed me because after I hung up the phone I realized when you are talking to anyone selling financial services, you never are safe in terms of retirement or insurance coverage (yes, I will plead guilty on this, but I am not selling anything).

Let me give you a few scenarios I have been a part of over the past couple of years when talking to various financial service folks about various topics:

  • If I talk about Life Insurance, and bring up that I prefer Term Insurance, inevitably the agent I speak with espouses the importance of “Whole Life” insurance as it will protect me in my “Golden Years”.
  • Credit Card companies used to call me incessantly asking if I wanted to increase my Credit Limit, because you never know when something might go wrong and I needed some extra help.
  • If I am negotiating a new Mortgage Term, the topic of Mortgage Insurance will inevitably come up, because it is important to protect my family in case something terrible happens.
  • When I call to talk about disability insurance, suddenly the topic of Catastrophic Illness insurance comes up.
  • And on, and on, and on….

My family is never really safe is it? I can never rest easy that I have enough insurance coverage, financial leverage or low enough debt load, is it? I realize that all of the cases I mention are sales folk simply trying to either up sell new services to me, or to make sure they have a bigger commission, but this does explain why I have such trepidation when I have to meet with anyone about my financial situation. I know I will be barraged with worst case scenarios, and how badly prepared I am for my retirement.



What is my TFSA Limit?

How Hard is it To Find Out my TFSA Limit?

There has been a lot of electronic ink written about TFSA limits, and how Canadians are depositing over their limits (and paying a dear price in penalties), but just how hard is it to actually find out your credit limit?

Step by Step

Do it One Step at a Time
(picture courtesy Microsoft ClipArt)

It is not that hard, if you use on-line banking. Let me walk you through the steps here:

  1. Go to the CRA’s My Account Page (yes that is the link for it). From there you can either try to create a CRA user id, if you wish, or you can use your On Line Banking Credentials (if you trust the CRA with them).
  2. Click on Continue to Sign-In Partner
  3. Click on your current bank (BMO Credit, BMO Access Card, Choice Rewards Mastercard, Scotiabank, TD, or Tangerine) or the one you wish to use (if you have multiple accounts to choose from).
  4. You will need your log in credentials on the login page, type them in (on a safe computer, not in an Internet Cafe or a library) and “Log In” to your CRA MyAccount.
  5. You are now at a CRA page with all the info you need, but you wanted your TFSA room right? Click on RRSP and Savings Plans tab near the top of the page.
  6. You then choose on the next page Tax-Free Savings Account (TFSA) and on the next page choose Contribution Room, and there you will see your limit.

You can also see what transactions you  have done for your TFSAs, so all in all very helpful. It will pretty much show every single transaction, so check that out while you are there as well.

If you wish to find your RRSP room, start again at step one and replace RRSP for TFSA in the instructions :-).

Doesn’t seem very complicated does it?