Special Update: CPI Drops a Point to 2.6

November 21st, 2008

Forgot that CPI numbers came out today, so we get a special update, and some very good news as well with the CPI dropping by almost a full point to 2.6%, mostly on the strength of the plummeting price of gasoline.

Although the growth in gasoline prices eased in the 12 months to October, they were still the most significant upward contributor to the overall growth in the Consumer Price Index (CPI). Prices at the pump increased 13.3%, compared with a 12-month change of 26.5% in September. On a monthly basis, gasoline prices fell 13.4% from September to October 2008.

Even with gas prices dropping it still was the largest price increase, which means next month’s numbers should be even more interesting, because gas prices in Ottawa right now are 70 cents a liter.

With inflation levels dropping will this mean even further interest rate drops by the Bank of Canada? Can gasoline prices stay this low? These are the two questions to keep in mind with this data.

Inflation Data Table

Consumer Price Index and major components

(2002=100)

Relative importance

October 2007

October 2008

September 2007 to September 2008

October 2007 to October 2008

Unadjusted

% change

All-items

100.00

111.6

114.5

3.4

2.6

Food

17.04

110.7

117.4

5.6

6.1

Shelter

26.62

118.7

123.2

4.5

3.8

Household operations and furnishings

11.10

103.4

105.2

1.8

1.7

Clothing and footwear

5.36

97.1

94.4

-1.3

-2.8

Transportation

19.88

115.2

117.0

4.7

1.6

Health and personal care

4.73

107.5

109.2

1.7

1.6

Recreation, education and reading

12.20

102.7

103.0

0.5

0.3

Alcoholic beverages and tobacco products

3.07

126.3

128.0

1.1

1.3

All-items (1992=100)

132.9

136.3

3.4

2.6

Special aggregates

Goods

48.78

107.1

108.9

3.4

1.7

Services

51.22

116.1

120.0

3.4

All-items excluding food and energy

73.57

109.6

110.6

1.0

0.9

Energy

9.38

134.5

147.5

18.2

9.7

Core CPI

82.71

110.3

112.2

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 (www.statcan.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 website (www.bankofcanada.ca/en/inflation/index.htm).