Inflation at 3.5% for August 2008

Yikes, now that is real inflation, with the CPI being announced at 3.5% for August 2007-08, and my first reaction is “yikes“.

Gasoline prices rose 26.3% in August compared with the same month a year earlier. Prices for other energy components, such as natural gas and fuel oil and other fuels, also contributed significantly to the rise in consumer prices. Overall, energy prices rose 20.2% over the 12 months to August 2008.

The increase in the energy price index accounted for about half of the overall increase in the 12-month variation of the CPI in August. Excluding energy, the CPI rose 1.8% over the 12 months to August, up from the 1.6% 12-month rate of growth posted for July.

Without price gouging on oil CPI would only be 1.8%, and might even be lower given those prices are increasing most likely to deal with higher energy prices.

The Big Picture

Interesting numbers to mull over, clothing prices continue to drop as well, very interesting to me.

Consumer Price Index and major components
(2002=100)
	Relative importance1	August 2008	July 2008	August 2007	July to August 2008	August 2007 to August 2008
		Unadjusted
					% change
All-items	100.00 2	115.6	115.8	111.7	-0.2	3.5
Food	17.04	116.8	116.5	111.8	0.3	4.5
Shelter	26.62	123.8	123.3	117.6	0.4	5.3
Household operations and furnishings	11.10	104.4	104.4	103.5	0.0	0.9
Clothing and footwear	5.36	93.7	93.3	95.4	0.4	-1.8
Transportation	19.88	123.1	125.7	116.3	-2.1	5.8
Health and personal care	4.73	109.3	108.5	107.6	0.7	1.6
Recreation, education and reading	12.20	103.5	103.2	102.9	0.3	0.6
Alcoholic beverages and tobacco products	3.07	127.5	127.6	126.1	-0.1	1.1
All-items (1992=100)		137.6	137.8	132.9	-0.1	3.5
Special aggregates
Goods	48.78	111.5	112.1	107.7	-0.5	3.5
Services	51.22	119.6	119.4	115.6	0.2	3.5
All-items excluding food and energy	73.57	110.5	110.4	109.2	0.1	1.2
Energy	9.38	164.0	169.1	136.4	-3.0	20.2
Core CPI3	82.71	112.0	111.7	110.1	0.3	1.7
2005 CPI basket weights at April 2007 prices, Canada : Effective May 2007. Detailed weights are available under the Documentation section of survey 2301 at (http://www.statcan.gc.ca/english/sdds/index.htm). Figures may not add to 100% due to rounding. The measure of Core Consumer Price Index (CPI ) excludes from the All-items CPI the effect of changes in indirect taxes and eight of the most volatile components identified by the Bank of Canada: fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuel; gasoline; inter-city transportation; and tobacco products and smokers’ supplies. For additional information on Core CPI, please consult the Bank of Canada Web site (http://www.bankofcanada.ca/en/inflation/index.htm).