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CPI at 0.5% for January in Canada, Wow that is Low!

Our friends at Stats Canada published on Friday the CPI for the year ending January 2013 and it was at a miniscule 0.5%, thanks to gas prices dropping (this may change quickly this month with gas prices shooting back up to $1.30 a liter here in Ottawa).

The Consumer Price Index (CPI) rose 0.5% in the 12 months to January, following a 0.8% gain in December. The main factor in the smaller increase in the CPI was gasoline prices, which fell 1.8% year-over-year in January after rising 1.0% in December.

Gas prices seem to be the yo-yo which is causing the inflation data to be a little hard to decipher in the past few months.  As can be seen from the following graphic, the Gas Index has been a little wild:

Gas Index Changes Past Little While

While the changes lately have not been as wild, it still is causing a lot of confusion when it comes to the Consumer Price Index. As I have harped on previously, fuel prices really do echo throughout the economy, since most things need to be delivered in some fashion or another.

Another interesting graphic on fuel’s effect on the CPI overall:

This is What Fuel Prices have been doing to the CPI

Our friends at Stats Can analysed and pointed out that:

Food prices increased 1.1% on a year-over-year basis in January following a 1.5% advance in December. This slower rise was mainly attributable to easing price increases for food purchased from stores, notably meat. January’s 0.6% year-over-year advance in the food purchased from stores component was the smallest since July 2010.

Shelter costs rose 0.6% in the 12 months to January, matching the increase in December. Rent and homeowners’ replacement cost was up on a year-over-year basis. Conversely, mortgage interest cost decreased 4.2%.

Here is the graph of the CPI over the past little while too:

CPI Over Past Little While

Bank of Canada View

Remember the Bank of Canada measures CPI in a little different way but their version of CPI is still low-ish:

The Bank of Canada’s core index rose 1.0% in the 12 months to January, following a 1.1% gain in December.

On a monthly basis, the seasonally adjusted core index rose 0.1% in January, matching the increase in December.

The Big Table

Here is the data from one of the BIG tables showing which categories had the biggest jump year over year and month over month:

Consumer Price Index and major components, Canada – Not seasonally adjusted

Relative importance1

January 2012

December 2012

January 2013

Dec 2012
to Jan 2013

Jan 2012
to Jan 2013

%

(2002=100)

% change

All-items Consumer Price Index (CPI)

100.002

120.7

121.2

121.3

0.1

0.5

Food

15.99

130.2

131.2

131.6

0.3

1.1

Shelter

27.49

127.1

127.5

127.8

0.2

0.6

Household operations, furnishings and equipment

11.55

112.2

113.2

113.5

0.3

1.2

Clothing and footwear

5.31

89.3

89.2

87.9

-1.5

-1.6

Transportation

20.60

127.4

125.8

126.7

0.7

-0.5

Health and personal care

4.95

118.1

118.6

118.5

-0.1

0.3

Recreation, education and reading

11.20

102.6

105.3

103.7

-1.5

1.1

Alcoholic beverages and tobacco products

2.91

136.3

138.3

138.9

0.4

1.9

Special aggregates

Core CPI3

82.15

118.4

119.5

119.6

0.1

1.0

All-items CPI excluding energy

89.92

117.9

118.7

118.7

0.0

0.7

Energy4

10.08

155.5

151.9

152.8

0.6

-1.7

Gasoline

5.80

174.7

171.7

171.6

-0.1

-1.8

All-items CPI excluding food and energy

73.93

115.2

116.0

115.9

-0.1

0.6

Goods

47.80

113.6

112.6

112.9

0.3

-0.6

Services

52.20

127.8

129.7

129.6

-0.1

1.4

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/2301-eng.htm).
2.Figures may not add to 100% as a result of rounding.
3.The Bank of Canada’s core index excludes eight of the Consumer Price Index’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 (www.bankofcanada.ca/rates/indicators/key-variables/inflation-control-target/).

4.The special aggregate “Energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.

Feel Free to Comment

  1. Interesting about food prices. We don’t personally pay a lot of attention to food prices (we’re fortunate), however one thing we do do is purchase much of our meat in bulk. Not only does that save $’s because our unit cost is lower, but it insulates us against these inflationary increases for about year. Buying a bunch of chickens and a quarter of beef once a year and throwing them in the deepfreeze means prices can go up, doesn’t affect us until next year.

    That’s not the motivation for purchasing our food that way, it’s just a nice to have I guess.

  2. The price of food has been affecting me. I looked at buying chicken last week but it is so expensive that it is no longer part of my grocery list. We don’t eat much meat and it has to be a big sale or an in store mark-down for some meat that is on it’s last day of sale for me to make a purchase.

    I keep cutting different foods to stay within my set food budget but sometimes I dream about steak……

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