Yikes: CPI hits 3.7% Gas to Blame for May 2011

Inflation is Hot!

The title pretty much sums it all up, thanks to the price of Gasoline and such, inflation is now at 3.7% year over year for May, which is the largest jump in about 8 years, which is cause for concern. Yes, a large portion of the jump is due to gasoline prices, but not completely, and how will the Government react to this in terms of interest rates and policy? (according to our good friends at Stats Canada)

It is possible to argue that this is an aberration, and gas prices are already falling and that inflation may calm back down, and let’s hope that might actually be the case, however, the CPI climb has been fairly relentless since 2010, and speaking as a consumer lots of things are getting pretty darn expensive.

CPI Last Year With and Without Energy

 

As you can see from the graphic Gas does take up a lot of the big jump in May (year over year).

As Stats Can points out:

Energy prices advanced 16.6% during the 12 months to May, following a 17.1% increase in April. Gasoline prices rose 29.5%, the largest increase since September 2005 when prices rose in the aftermath of Hurricane Katrina. The latest year-over-year increase follows a 26.4% gain in April, and leaves the gasoline index just below the peak level reached in July 2008. Prices were also higher for fuel oil (+28.2%) and electricity (+0.9%), while they declined 5.3% for natural gas.

Good to hear the Natural gas prices have dropped a little, but the gas and fuel oil price jumps are killing consumers and businesses right now as well.

How bad is Gas prices?

Gasoline Index, As Bad as 2008?

Given how low it has been, this rise is more than a little disconcerting.

CPI Seasonally Adjusted for the past little while.

Bank of Canada’s core index

The Bank of Canada’s core index advanced 1.8% in the 12 months to May, following a 1.6% gain in April. This is very interesting given the Bank uses their own barometer in terms of prices, and somehow energy and gas don’t have that big a weight in this, which is wild (IMHO).

Gas prices will drive up food prices, and have already done so, and now in Ottawa the Transit Commission and the Police are complaining they will be blowing their budgets for the year due to gas prices too. Hard to believe the Bank of Canada would not put a heavier weight on energy.

The Big Table

As my regular readers know, I love tables of numbers, and with the CPI Stats Canada has some amazing number sets to reflect how the data is derived.

Relative import¹ May 2010 April 2011 May 2011 April to May 2011 May 2010 to May 2011
Not seasonally adjusted
% (2002=100) % change
All-items CPI 100.00² 116.3 119.8 120.6 0.7 3.7
Food 15.99 122.9 126.9 127.7 0.6 3.9
Shelter 27.49 123.0 125.2 125.2 0.0 1.8
Household operations, furnishings and equipment 11.55 108.6 109.8 110.4 0.5 1.7
Clothing and footwear 5.31 92.7 93.1 93.7 0.6 1.1
Transportation 20.60 118.1 127.2 128.9 1.3 9.1
Health and personal care 4.95 114.6 117.3 117.2 -0.1 2.3
Recreation, education and reading 11.20 103.6 105.1 106.1 1.0 2.4
Alcoholic beverages and tobacco products 2.91 132.1 135.0 135.7 0.5 2.7
Special aggregates
Core CPI³ 82.15 115.7 117.2 117.8 0.5 1.8
All-items CPI excluding energy 89.92 114.6 116.7 117.3 0.5 2.4
Energy 10.08 137.4 159.2 160.2 0.6 16.6
Gasoline 5.80 147.1 186.8 190.5 2.0 29.5
All-items CPI excluding food and energy 73.93 112.8 114.4 115.0 0.5 2.0
Goods 47.80 109.4 113.7 114.4 0.6 4.6
Services 52.20 123.2 125.9 126.7 0.6 2.8
1. 2009 CPI basket weights at April 2011 prices, Canada, effective May 2011. Detailed weights are available under the Documentation section of survey 2301 (www.statcan.gc.ca/imdb-bmdi/index-eng.htm).
2. Figures may not add to 100% as a result of rounding.
3. 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, consult the Bank of Canada website (www.bankofcanada.ca/rates/price-indexes/cpi).

A Year Ago?

So a year ago inflation was moderating with gas prices coming back into line.

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What is Your Financial Plan B?

My kids being rather sporty has allowed me to be exposed to some very elite athletes who are very talented and their talent makes you sure they will go far in this sport, however, what happens if something goes very wrong?

This past weekend a very talented player on one of my daughter’s rugby team damaged her ACL (at least that is the initial diagnosis), and after dealing with one of my other daughter having her ACL broken, I know that this is a devastating injury, with a long recovery time (and some long-lasting issues as well). This player was going to play for a University team and was an elite level player, but now what?

This same kind of tragic accident/incident can happen in anyone’s life and it begs the question What is your financial plan B? Plan B, typically is the name given to the steps you must take if your initial plan fails, or is in someway derailed, and everyone should at least have a generic Plan B for their finances to deal with a catastrophic failure of some kind?

Rest In Peace , Wills,What do I mean by a catastrophic financial failure?

  • Sudden death of the main family bread-winner is the easiest financial catastrophe that everyone should have a plan in place (i.e. Life Insurance and/or a Will). Yes that is a simple example, but you’d be surprised how few folks don’t even think about that one.
  • Loss of job of major bread-winner (or possibly even both): This one I have lived through, and I thought I had a plan, but believe me, it was not in enough detail, and the more you plan, or think about this, the less gut wrenching it can be if it happens to you (or your spouse). I assumed I was going to get a “settlement” for getting laid off, which I did, but folks who got hit a month after I did, ended up with nothing, and those folks really were in deep trouble, can you deal with that kind of a disaster?
  • Economic disaster (read 2008), where stock values and fortunes can decrease (if not disappear) over night, can you deal with a sudden portfolio drop? Are you close enough to when you might need those funds that you should maybe take your profits now?
  • Health failure, not death, but the major breadwinner is unable to work, how will that work? Do you need disability insurance, or do you create a “nest egg” or “disaster fund”? Can you deal with this?

What does your Financial Plan B look like? Have you had to use your Plan B?

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Model Home Version 0.1

So we spent Monday watching some new windows get installed on my house. You remember my house, it was a model home and we keep learning more and more about the “tricks of the trade” (at least for this builder at the time) and some of the short cuts that they have taken, and today was no exception (buying a model home, is like using Prototype Hardware, you might get a gem, but you will get a lot of headaches too).

Previously we learned that the model home can sometimes be where the builder may have taken a few shortcuts when building it. We have more than once attempted to remove the wallpaper in the house only to find that there is no primer underneath it, so we then end up ripping the skin off the gyp rock as well. The only way to fix this issue is to paint over the wallpaper (not recommended) or to rip the wallpaper off as carefully as possible and then repair the damage done (and then put down some primer first).

We haven’t had a lot of issues with our house, and we have wanted to replace the wooden windows for a while, however other expenses have jumped up on the priority list, replacing the windows over the years, specifically:

  • Replacing the roof, which was shot when we moved in and was leaking in spots.
  • The furnace and air conditioner, which decided they needed to be replaced about 3 years ago
  • Every appliance in the kitchen
  • Getting laid off, didn’t really want to blow any money on the house at the time.

However, finally this year we decided to bite the bullet and start replacing the windows on the house. I know normally folks say get 3 quotes before deciding (we did that with the roof and the furnace), however I know someone who is particularly festidious and cheap, who had already done the work so I simply borrowed his good work, and use the company that he had used (on his own home and on his mother’s home).  The estimate was comparable to what I thought, and we ended up ordering the windows and they were installed on Monday.

The installation started off with not too much fanfare, but while work was being done one of the installers called me over to point out that in fact the original windows seemed to have no insulation around them at all (no foam, no fiberglass, no cotton, nothing) which would explain why the windows managed to rot out so nicely (good air circulation around it from both sides, lots of water seepage around it and condensation too). This means my windows wear actually letting a great deal of heat out in the winter and heat in, in the summer.

So with these new windows I will end up doing two good things for my house:

  1. Effectively hold or maybe increase the value of the house, as it no longer looks like a “crack house” or a “grow op” (OK, I should also cut the grass more) which are not that uncommon in our section of Ottawa. The curb appeal of a house cannot be discounted, these days.
  2. Save me some money on heating and air conditioning charges. I don’t think I’ll delude myself into thinking I am going to recuperate the values of the windows, just that it might be nice to think that my electric and gas bills may not increase in value quite as quickly as they have in the past.

What’s next on House Version 0.1 (maybe with this upgrade it is House 0.32)? My guess is the rest of the windows (the back of the house still needs to be done), the deck and more likely the flooring is next (although the kitchen is pretty bad too).

Oh another interesting thing we learned is if they don’t prime the ceilings, and then spray on the stippled plaster stuff, it bubbles and falls off too (yes there is a lot of work still to do on the interior too).

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Welcome to the Carnival of Personal Finance #315 where we will be celebrating that in Canada and the U.S. at this time of year there are many long weekends, specifically: Saint-Jean Baptiste Day (in Quebec), Canada Day (in all of Canada) and of course the 4th of July in the U.S.. What a wonderful time and this year is especially great because all of these holidays fall on a Friday or Monday so bring on the long weekends!!!

I have removed a few of the more blatantly promotional posts (or non topical (imho)), but have attempted to include as many relevant posts as were submitted, unlike my previous attempt on the Carnival of Personal Finance #192 Family Day Edition (I still get angry comments on that one).

Editor’s Choice

As Editor I get to choose the submissions for the week that I enjoyed the most, now remember I am not claiming these are the best posts of the week submitted, only that they resonated with me and I enjoyed reading them (for clarity):

  • Mike from Experiglot presents A One Week Guide for Raging Your Way to Personal Finance Success, and says, “One week to master your finances.”
  • Nicole from Nicole and Maggie: Grumpy Rumblings presents Prom Memorie$, and says, “Nicole and Maggie discuss the cost of prom and ask: Has the cost of prom really increased or just expectations? Is it worth going to prom if you don’t pay for the whole shebang, limo and all?”

Saint Jean Baptiste Posts

Quebec Proud

Gens Du Pays, c’est à ton tour…

In this section we have posts that help celebrate the Joix de Vive of our Quebecois amies.

Amanda from My Dollar Plan presents 5 Scary Foreclosure Fiascos, and says, “Here are some crazy examples of foreclosures gone wrong. Some you wouldn’t believe!”

Boomer from Boomer & Echo presents Are Store Brands As Good As Name Brands, and says, “If the price difference is only a few cents I tend to buy name brands, but for the most part I don’t find much difference in generic and store brands.”

FMF from Free Money Finance presents I Joined a Credit Union, and says, “What’s not to love about 4% interest?”

Janet from Credit, Eh presents Business Credit Card: Separating Personal Expenses from Business Expenses, and says, “One of the best ways to organize your finances so that your business expenses are easier to track is to make sure that they are separate from your personal expenses. One way to make sure that you are keeping everything separate is to get a business credit card.”

Jacob @ My Personal Finance Journey from My Personal Finance Journey presents American Growth Fund of America – An Example of Things That UPSET Me!, and says, “According to Kiplinger’s Personal Finance, the American Growth Fund of America, Symbol AGTHX, is the largest equity mutual fund in the world (by assets).However, does the performance history of this fund warrant it’s popularity? This post takes a detailed look at this question.”

Junior Boomer from Consumer Boomer presents Saving Enough Money for Retirement, and says, “To determine if you are currently on track for retirement, complete the following steps…”

Canada Day Posts

Canadian Flag

Canada Day or Dominion Day or Whatever les Quebecois call it.

This year Canada turns 144 years young and with special celebrations with Prince William and Kate in Ottawa, theses posts show the joy that is shared in Canada, land of Peat Moss, Potash, Mosquitoes, Black Flies, Poutine, Beaver Tails and Lacrosse (and Hockey I hear too):

Tom Drake from Canadian Finance Blog presents The Three Legal Documents Of An Estate Plan, and says, “The Will, Enduring Power of Attorney and Personal Directive are the three legal documents in an estate plan”

Jim Yih from Retire Happy Blog presents A Personal Directive gives direction for health care decisions, and says, “A Personal Directive is a written, signed, dated and witnessed document that appoints someone else to look after your health matters.”

Control Your Cash from Control Your Cash presents Public Enemy #1, and says, “Why do we let a man with a 5-digit credit card bill make financial decisions for us? ”

Sustainable PF from Sustainable Personal Finance presents How Menu Planning Saves Time and Money, and says, “If you have a menu, you are less likely to go off the rails shopping”

Ben from Money Smart Life presents Investing on a Budget, and says, “5 things to consider when investing on a budget”

Nathan Richardson from ComplexSearch presents What is a Good Credit Score, and says, “Credit scores are vital to your financial health, managing your credit score can save you thousands of dollars a year. Learn what it takes to score high, and how to improve your score.”

Miranada @ Financial Highway from Financial Highway presents 35 Ways to Make More Money, and says, “Even the best of times, one of the most common questions asked is, “How do I make more money?” While an increase in income can ease the way things work in your personal economy, it won’t necessarily solve all your problems. ”

Mike from Green Panda Treehouse presents Everything You Need to Know About Automatic Savings Plans, and says, “How you can automate your savings.”

4th of July Posts

4th of July

Fourth of July

These posts really sum up all that is great about our Big Brother to the south, and all that their celebrations entail (I will be watching and enjoying them as well).

Lindy from Minting Nickels presents Steal My Ideas for Businesses I’d Never Run, and says, “I’m giving away free business ideas! Well, they’re mostly free… ”

Philip from Deliver Away Debt presents Best Get Out of Debt Books, and says, “Ten of the best advice books for getting out of debt.”

Tim from How to Make Bankable Savings presents Credit Card at Gas Pump: A Money Saver with Many Virtues, and says, “This is a new personal finance website. I intend it to be about my thoughts, ideas and experiences about personal finances”

Jeff Rose from Good Financial Cents presents Average Cost of Law School Tuition- Is it Really Worth it?, and says, “So is the average cost of law school really worth it? Let’s find out…..”

Ryan from Cash Money Life presents Unexpected College Expenses, and says, “College is expensive, but it’s even more costly when you let things sneak up on you. Do your best to avoid these unexpected college expenses.”

Money Thinker from Money Thinking presents Reader Question: Are there Alternatives to Student Loans, and says, “Money Thinker answers a reader question about alternatives to student loans. ”

Glen Craig from Free From Broke presents Save Money on Vacation Plans with Frugal Staycation Ideas, and says, “Sometimes a full-on vacation is too expensive or impractical. See how you can save and have a blast with a staycation instead.”

Cathy Moran from Money Health Central presents Breaking Out of the Bank Draft Web, and says, “The convenience of automatic bank drafts is soon forgotten when you struggle to stop the automatic payment.”

Sean Smarty from Grow Money presents Micro-Lending: How Not-For-Profit Investing Is Sweeping Across America.

NCN from No Credit Needed presents Structure and Freedom, and says, “These are the systems that we have put in place to help us manage our finances, get out of debt, and save money.”

Bob from Christian Personal Finance presents 3 Hotels Offering Summer Promotions For Free Nights, and says, “Most of the major hotel brands know that this is a prime travel and vacation time, so they’ve tried to help us out by offering some discounts to entice us to stay in their hotel brand. While there are a lot of current hotel discounts, below are some ways to get free hotel nights…”

Tom from Stupid Cents presents 401k Allocation, and says, “Want to improve your 401k allocation? Here is a look at a few of the more popular asset classes that available for 401k plans.”

Philip Taylor from PT Money Personal Finance presents Roth IRA Rules, and says, “Article discusses what a Roth IRA is, the advantages and disadvantages, rules for contributing, and why people should consider utilizing them.”

Outlaw from Outlaw Finance presents The Real Difference between Roth IRA and Traditional IRA, and says, “Looks at the Roth and the traditional IRA individually and then compares the two. ”

Frugal from TotallyMoney presents Are arts graduates being exploited?

Pat S from compounding returns presents Buy and Hold vs. Buy and Own Investing, and says, “Buy and hold is dead. Buy to own.”

Kevin Mulligan from RothIRA.com Retirement Planning Blog presents Should You Change Your Employer’s Automatic 401k Enrollment?, and says, “Many employers automatically enroll their employees to invest 3% of their salaries into the company 401k plan. But is that enough? Is it too much?”

Neal Frankle from Wealth Pilgrim presents Creating Wealth – Avoid These 3 Mistakes, and says, “If you’re interested in creating wealth it’s a good idea to study the people who achieved financial success. Of course it’s important to have a great entrepreneurial ideas. But it’s also important to learn from the people who had it and lost it. Here is one story that provide 3 invaluable lessons”

Meg from CreditDonkey presents How to Get Better Gas Mileage, and says, “With gas prices rising, let’s learn how to save money by getting better gas mileage.”

Damon Day from Damon Day & Associates presents Taxes on Debt Settlement, and says, “Consumers are typically confused about why they may be required to pay taxes on a debt they have forgiven. This article breaks it down for them and provides a logical explanation. ”

D4L from Dividend Growth Stocks presents 11 Higher Yielding, Lower Risk Stocks To Perk Up Your Dividend Income, and says, “If your goal is to accumulate wealth for a comfortable retirement, then there is no risk-free path. Throughout time every angle has been tried and failed. Inherently, individual stocks will carry higher risk due to the lack of diversification when evaluated on a stand-alone basis”

Squirrelers from Squirrelers presents First Job Lessons Learned, and says, “Many times it’s easy to dismiss first jobs, but we can often learn a lot of lessons from our experience”

Matt Bell from Matt About Money presents How to Be a Smart Organic Food Shopper, and says, “With the high cost of organic food, it can easily feel like you can either eat healthy or spend smart – not both. Here are some ideas for spending smart on organics.”

Shawanda Greene from You Have More Than You Think presents Money Lessons Learned from the NFL Lockout.

What do you mean the Next Long Weekend is Labour Day?!?!

These posts make us long for yet another long weekend, and soon! I guess we can burn some vacation days to enjoy them…

Adam from Rabbit Funds presents HOW TO: 6 Steps to starting a home business [Part 1], and says, “The purpose of this post is to give you a basic overview of how to go about starting a business.”

Shaun Connell from Retirement Blog presents How Much Do You Need to Retire?, and says, “A comprehensive guide for doing the math to figure out exactly how much you need to achieve your retirement dream. It’s probably less than you’d think.”

Sara Nunnally from Smart Investment Daily presents Black Swan Event: Will the S&P 500 Drop 40%?, and says, “Yesterday, the chief investment officer for Universa Investments predicted that the S&P 500 could drop 40% in the next couple of years. Smart Investment Daily editor Sara Nunnally explains how you can protect yourself and profit if this Black Swan event happens.”

Dividend Growth Investor from Dividend Growth Investor presents Kinder Morgan Partners – One Company three ways to invest in it, and says, “Kinder Morgan Energy Partners, L.P. owns and manages energy transportation and storage assets. This master limited partnership has consistently increased distributions since 1997. There are three ways to invest in the partnership:”

PCC from Promo Code Center presents Why Buying Online is Better.

Clint from Accumulating Money presents How to Be a Stay-at-Home Investor, and says, “The good news is that it definitely is possible to become a stay at home investor. The bad news is that it won’t be easy and the odds that you’ll have the fabled four hour workweek are slim to none.”

Matt from Dividend Monk presents Dover Corporation Dividend Stock Analysis, and says, “Dover Corporation (DOV) is a collection of several businesses that develop engineered components and systems. All things considered, I find Dover to be a reasonable company to invest in at the current price. ”

Roger Wohlner from Chicago Financial Planner presents Investing is Not Sexy, and says, “In a recent post for US News Smarter Investor I said the following: “Sorry to disappoint, but investing is not sexy or trendy. It takes persistence, monitoring, and commitment.” I want to elaborate on this a bit here.2″

Jim from Bargaineering presents Visa Signature Perks.

Ken from Spruce Up Your Finances presents 9 Quick Facts About The Traditional IRA Contributions, and says, “Some facts you should know about when making a traditional IRA contribution”

Sun from The Sun’s Financial Diary presents The Fall Of Blockbuster: A Lesson On Keeping Your Business Model Current.

Wrap Up

Don’t forget to check out the Carnival of Personal Finance site, to see where the next Carnival is posted and such!

 

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6 Months ’til Christmas (and Oldie but Goodies)

Xmas is Coming

Six months today is Christmas 2011, isn’t that amazing? To me it’s more like petrifying, where has the year gone? I do know some folks who have already started Christmas shopping, and others who already have their Christmas vacation or visiting already well planned, I have neither as well.

Ho, ho, ho or better still Holy Crap!

Oldies but Goodies

This week, I was in a more irreverant mood, so the collection of older posts included some eclectic commentaries on life:

  • On Father’s Day I took advantage of that day to tweet one of my favorite posts Father’s and Money, which discusses how we all learn about money from our Dad’s (or Mother’s).
  • With the Most Important Feature of a Credit Card I take a sarcastic view of why some folks choose a Credit Card (for the wrong reasons).
  • With Financial Discretion, I was pointing out how the current generation just doesn’t seem to understand what should and should not be spoken about in terms of money.
  • My loathing of Top 10 Lists are reflected in Top 10 Bad Financial Lists, which is me poking fun at all the bloggers who have read the “handy tip sheets” that say people LOVE Top 10 lists (me I don’t).
  • I read a while ago an interesting little book on 75 Ways to Save Gas, which has some interesting common sense ideas (and some wacky ones as well).

Enjoy your Sunday and remember to start planning your Christmas too!

 

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