Canadian Personal Finance Blog

Archive for January 23rd, 2009

Very Low CPI but Gas is to Blame Again

Year over year the adjusted Consumer Price Index for December is 1.2%, which is back to the very low levels we have seen for the past few years.  The month over month rate change is actually NEGATIVE at -0.7% (deflation?), which is very interesting as well.

The major contributor to this drop in rate is of course gasoline (in fact the CPI without gasoline adjustment is at about 2.6% which is about the target for inflation, but plummeting Gas prices seem to be dragging the entire index down at a much higher rate.

A few highlights from the report:

Gasoline prices in December 2008 were 25.8% below levels in the same month the year before. This was the largest drop since the inception of the gasoline price index in 1949 and followed a 14.4% drop in pump prices in November….

…The most significant upward contributor was mortgage interest cost, despite a recent decrease in mortgage interest rates. Increasing prices for natural gas and various food items, particularly fresh vegetables and bakery and cereal products, also put significant upward pressure on consumer prices in December.

CPI inflation continues to substantially slow as the CPI excluding gasoline slightly retreats

Given gas prices are starting to move back up slowly it may be that inflation may not stay as low as this, but given the market pressures it is not likely that other areas will increase much either, given the much lower consumer spending (demand) thanks to the Financial Apocalypse as well.

The Big Picture

End of an Historic Week

A week of historic and momentous moments that we will all remember for a very long time.

1. Interest rates in Canada are at 1% and might well drop to lower values, which is astounding, money is now effectively free (for the right borrowers).
2. The most important thing this week is of course without a doubt a moment that will change history and that is the Arizona Cardinals making it into the Super Bowl. The Cardinals making the Super Bowl has reignited my hope that anyone can succeed.
3. There was also a very inspiring man this week too, who gives us all hope, and that of course is the Cardinals quarterback Kurt Warner. Twelve years ago he was bagging groceries, then he got his big change and led a team to the Super Bowl, and for some that might have been enough but now he is leading a team no one thought could make it to the top to the pinnacle of football greatness. Kurt Warner is also a humble man and a giving man, who works tirelessly for charities as well.
4. Oh and there was an inauguration this week too I think.