Expensive Food in Canada in March

Our friends from Stats Canada say that our basket of goods that makes up the Consumer Price Index went up only 1.2% year over year (with the year ending March 2015), which sounds just fine, but (as we know) the devil is in the details of these numbers, isn’t it?

The numbers sound lovely, except if you throw gasoline out of the equation and then your numbers change by increasing by a full 1 % (i.e. 2.2%).

CPI with and without Gasoline

CPI with and without Gasoline over the past little while

Given that gasoline had a 19.2% price drop (year over year) there must have been something else that went up a lot to keep the CPI going up the way it is. Any guesses as to what was the big nasty price increase? Booze and smokes (naturally) however, a close 2nd place is food which is up 4.2% (year over year), but looking closer, Meat is up 11%, so the meat eaters of Canada are taking it right in the wallet.

A quick glance at how “all over the place” prices are over the past 12 months:

Prices by Category

Price increases by category (past 12 months), compared with February

Luckily in Ontario booze prices are going to go up with the new Beer Tax proposed as well, yea! I suppose they could impose a Sirloin tax, but let’s hope they don’t think that far out of the box.

Bank of Canada’s core index

To help out with the confusing arithmetic, we have a different index for the Bank of Canada’s view, and remember their “sweet spot” for Inflation is 2.0%, and the past two months, their index has been over that, so are interest rate increases coming some time this year? Here is what Stats Canada said:

The Bank of Canada’s core index increased 2.4% in the 12 months to March, after rising 2.1% in February.

The seasonally adjusted core index rose 0.4% on a monthly basis in March, following a 0.1% increase in February.

However, the Bank of Canada already commented in this area, on Wednesday, and their statement about keeping their key overnight rate steady was:

Risks to the outlook for inflation are now roughly balanced and risks to financial stability appear to be evolving as expected. The Bank judges that the current degree of monetary policy stimulus remains appropriate and therefore is maintaining the target for the overnight rate at 3/4 per cent.

This was after they explained that the Canadian economy was “stalled” in the first quarter of 2015, so it seems the economy continues to be addicted to stimulants.

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Stats Canada published the Consumer Price Index a little earlier this month (this past Thursday), and as I guessed the continued oscillations of Gas prices has caused the January CPI to seem to suggest that prices only rose 1.0% year over year, which of course, is more fun with numbers. Without gas prices included the actual CPI is around 2.5%, and with gas prices going back up 25% this past month, look for a not so happy story in February.

CPI with and without gas prices

CPI with and WITHOUT Gas prices for the past little while

The major increase that impacts everyone is the 4.5% increase in Food prices, to quote Stats Canada:

Food prices advanced 4.6% on a year-over-year basis in January, the largest gain since November 2011. Prices for food purchased from stores were up 5.4% in the 12 months to January, following a 4.2% rise the previous month. Prices for both fresh fruit and fresh vegetables posted higher year-over-year increases in January than in December. Consumers paid 2.8% more for food purchased from restaurants in January compared with the same month in 2014.

Given all the cogitations of fuel prices the price of food has been steadily going up, and making it a lot harder for lower and middle-income Canadians to feed their families.

CPI for past little while

Seasonally adjusted CPI for past 5 years or so

Bank of Canada’s core index

Let us hope that the Bank of Canada has a more sane view of inflation?

The Bank of Canada’s core index rose 2.2% in the 12 months to January, matching the increase in December.

The seasonally adjusted core index rose 0.2% on a monthly basis in January, matching the gain in December.

Well, it is closer to the real numbers, but I suspect we will continue with our over-stimulated economy for a while longer.

Consumer Price Index, major components and special aggregates

A usual, I will include one of the big tables for you to see just how interesting all the numbers are, and you do the comparison on things.

 

Relative import1 January
2014
December
2014
January
2015
Dec 2014
to Jan 2015
Jan 2014
to Jan 2015
% (2002=100) % change
All-items 100.002 123.1 124.5 124.3 -0.2 1.0
Food 16.41 133.0 137.4 139.1 1.2 4.6
Shelter 26.80 130.5 133.0 133.1 0.1 2.0
Household operations, furnishings and equipment 13.14 114.7 117.8 118.0 0.2 2.9
Clothing and footwear 6.08 89.2 91.1 91.1 0.0 2.1
Transportation 19.10 129.2 124.9 122.4 -2.0 -5.3
Health and personal care 4.73 118.3 119.6 120.0 0.3 1.4
Recreation, education and reading 10.89 104.7 106.1 105.6 -0.5 0.9
Alcoholic beverages and tobacco products 2.86 140.9 149.1 149.9 0.5 6.4
Special aggregates
Bank of Canada’s core index3 85.39 121.3 123.7 124.0 0.2 2.2
All-items excluding energy 92.21 120.1 122.5 122.9 0.3 2.3
Energy4 7.79 160.2 148.7 139.5 -6.2 -12.9
Gasoline 3.84 179.5 149.9 131.3 -12.4 -26.9
All-items excluding food and energy 75.80 117.3 119.3 119.5 0.2 1.9
Goods 46.68 114.2 114.6 114.0 -0.5 -0.2
Services 53.32 131.9 134.5 134.7 0.1 2.1
  1. 2013 Consumer Price Index (CPI) basket weights at December 2014 prices, Canada, effective with the January 2015 CPI.
  2. Figures may not add up to 100% as a result of rounding.
  3. The Bank of Canada’s core index excludes eight of the CPI’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 index, consult the Bank of Canada’s website.
  4. The special aggregate “energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and accessories for recreational vehicles.

Source(s):

CANSIM tables 326-0020 and 326-0031.

 

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Gas Prices Drive Down Inflation in December to 1.5%

As I assumed the inflation numbers for the end of the year have gone completely squirrely™ (my new term for numbers manipulated to create a false sense of security) thanks to plummeting gas prices. Given gas is almost 1/2 price compared to 2 years ago, which is nuts, but I just keep feeling this whole thing is a manipulation, but that remains to be seen.

Inflation was around 2.4% (year over year) just a short while ago, now it is at 1.5%, and there is a real chance of it dropping further, if gas prices continue to drop (although I note Diesel fuel prices are not dropping that fast, so the trucking industry or farmers are not basking in the joys of the current low gas prices).

How squirrely are these numbers?

The Consumer Price Index (CPI) rose 1.5% in the 12 months to December, following a 2.0% increase in November.

That is a 25% drop in one month for the year over year inflation numbers, pretty big, but what does it really mean?

CPI Past Little While

The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline

You can see without the gasoline, inflation continues to run above 2.0%, which is worrying, isn’t it? I bet you are asking just how much did Gas drop these past 12 months?

On a monthly basis and before seasonal adjustment, the gasoline price index fell 9.8% in December. Between June and December 2014, gasoline prices decreased 24.6%. In comparison, prices for gasoline declined 42.7% between June and December 2008.

Gas prices for past little while

Gasoline prices continue to fall in December

That is a bloody big drop. The graph shows how big a drop it was:

How does this all look in the big basket? This is the measure of the actual price over time.

Seasonally adjusted CPI

Seasonally adjusted monthly Consumer Price Index

Bank of Canada’s core index

Remember the Bank of Canada has their own way of measuring things, and they seem to not be taking gas into the equation (as much):

The Bank of Canada’s core index rose 2.2% in the 12 months to December, after increasing 2.1% in November.

Interesting that they lowered interest rates even with Inflation at 2.1%?

The Big Table

Let’s have a look at one of the big tables to see what has gone up in price

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

Relative import1 December
2013
November
2014
December
2014
Nov to Dec 2014 Dec 2013 to Dec 2014
% (2002=100) % change
All-items Consumer Price Index (CPI) 100.002 122.7 125.4 124.5 -0.7 1.5
Food 16.60 132.5 136.9 137.4 0.4 3.7
Shelter 26.26 129.9 132.8 133.0 0.2 2.4
Household operations, furnishings and equipment 12.66 114.7 118.2 117.8 -0.3 2.7
Clothing and footwear 5.82 89.4 94.7 91.1 -3.8 1.9
Transportation 19.98 128.5 127.7 124.9 -2.2 -2.8
Health and personal care 4.93 118.1 119.9 119.6 -0.3 1.3
Recreation, education and reading 10.96 105.3 106.8 106.1 -0.7 0.8
Alcoholic beverages and tobacco products 2.79 141.2 149.4 149.1 -0.2 5.6
Special aggregates
Core CPI3 84.91 121.0 124.1 123.7 -0.3 2.2
All-items CPI excluding energy 91.44 119.9 122.9 122.5 -0.3 2.2
Energy4 8.56 158.9 156.5 148.7 -5.0 -6.4
Gasoline 4.62 179.7 166.2 149.9 -9.8 -16.6
All-items CPI excluding food and energy 74.85 117.1 119.8 119.3 -0.4 1.9
Goods 48.18 113.8 116.2 114.6 -1.4 0.7
Services 51.82 131.7 134.5 134.5 0.0 2.1

1.2011 CPI basket weights at January 2013 prices, Canada, effective February 2013.

2.Figures may not add up to 100% as a result of rounding.

3.The Bank of Canada’s core index excludes eight of the CPI’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, consult the Bank of Canada’s website.

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

Source(s):

CANSIM tables 326-0020 and 326-0031.

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Low Gas Prices puts Inflation at 2.0% In November

Our friends at Stats Canada told us what we kind of already knew, that lower gas prices in November lowered inflation to 2.0% (year over year).

If we look at the graph of Inflation for the past little while, it is really a saw-tooth of ups and downs (but luckily all of this happening around 2.0% as the median):

Inflation Canada

Inflation for the past 5 years

How wild has gas prices been lately? Luckily Stats Canada also included this helpful graph to show us just how crazy things are right now.

Gas Price Index

Gas Price Index

Mid-year we are setting new records and now we are well below $1 a litre (in Ontario at least). Does this mean things are just “peachy keen”? Not, really, that inflation is at 2.0% with gas dropping that much suggests other essentials are going up at a higher rate.

To quote our friends at Stats Canada:

The shelter index rose 2.3% in the 12 months to November, following a 2.8% gain in October. Natural gas prices increased 14.7% on a year-over-year basis in November, after recording a 20.1% rise the previous month. As well, electricity prices were up 3.6% year over year in November, following a 5.6% increase in October.

Food prices advanced 3.1% on a year-over-year basis in November. Prices for food purchased from stores were up 3.3% in the 12 months to November, led by a 12.2% rise in meat prices. Food purchased from restaurants cost 2.5% more in November compared with the same month in 2013.

Holy cow! Meat prices are up over 12%?!? Meat did seem more expensive in my visits to the grocery stores.

Bank of Canada’s core index

Remember that the Bank of Canada measures CPI in a bit different way, and that is what they use in terms of figuring out whether to slow the economy down. Luckily we are still in the “sweet spot” for the Bank of Canada, so we are less likely to see interest rates going up (for this reason at least).

The Bank of Canada’s core index rose 2.1% in the 12 months to November, after increasing 2.3% in October.

The seasonally adjusted core index posted no change on a monthly basis in November, following a 0.2% increase in October.

What is the CPI?

This month I won’t include any of the big tables, as we have already discussed the major category increases, but Stats Canada has published on their YouTube channel a helpful video explaining, just what is the CPI, have a look.

Inflation over 2014 so far

Reports on inflation from:  January , February , March , April , May , JuneAugust , September , October

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Inflation Stays High Despite Lower Gas in October

Our friends at Stats Canada published their monthly report on the Consumer Price Index, and the numbers are not what I was guessing it might be (in that it is still inching up in the Bank of Canada Red Zone).

To quote the report precisely:

Higher prices for shelter and food led the rise in the CPI. At the same time, larger year-over-year price increases for transportation and for clothing and footwear contributed the most to the acceleration in the CPI.

So, day-to-day living costs of shelter and food are up last month and thanks to transportation continues to drag the year over year number up? Lovely.

CPI For Past Little WHile

The 12-month change in the Consumer Price Index, from October 2009 to October 2014

To be more clear about the shelter increase year over year, Stats Canada pointed out:

Shelter costs rose 2.8% in the 12 months to October, led by a 20.1% gain in natural gas prices. Consumers also paid more for electricity, homeowners’ home and mortgage insurance as well as rent in October compared with the same month in 2013. Property taxes rose 2.2% on a year-over-year basis, while mortgage interest cost declined 0.2%.

That is wild that mortgage rates actually lowered the cost of shelter over the year? Wow. The Natural Gas and Electricity increase makes me shake my head. Here in Ontario the Electricity cash grab was mostly due to bad management and government interference, and the Natural Gas is mostly due to artificially created shortages by mismanagement on the part of the Natural Gas suppliers (see a repeating theme here).

While I am confident there are those saying, “Why worry CPI is at 2.5% and my income is growing faster than that“, and you may be correct, but that is assuming these stats reflect the actual world (I always view them as a “it increased at least this much” point of view, I suspect prices actually went up higher, but how the data is manipulated makes it more optimistic). If inflation runs at 2.5% and you get a 3.2% raise and your investment grow at 3.0%, yes you are ahead but only by 0.7% in terms of income and 0.5% in terms of savings.

 

CPI for past little while

Seasonally adjusted monthly Consumer Price Index, from October 2009 to October 2014

Bank of Canada’s core index

The Bank of Canada’s core index rose 2.3% in the 12 months to October, after increasing 2.1% in September.

The seasonally adjusted core index increased 0.2% on a monthly basis in October, matching the gains in September and August.

This is important because this is the Red Zone for Bank of Canada in terms of interest rates, so we have best watch out if this creeps up a little more, we may see an easing of lower interest rates (to use banker baffle gab speak).

The Big CPI Data Table

This month’s big table is the seasonally adjusted numbers, not sure how this adjustment works, but have a look and see if you can figure it  out.

Consumer Price Index, major components and special aggregates – Seasonally adjusted

August
2014
September
2014
October
2014
August to
Sept 2014
Sept to
Oct 2014
(2002=100) % change
All-items Consumer Price Index (CPI) 125.6 125.8 125.9 0.2 0.1
Food 135.4 136.3 136.4 0.7 0.1
Shelter 132.4 132.5 132.8 0.1 0.2
Household operations,
furnishings and equipment
117.8 117.5 117.8 -0.3 0.3
Clothing and footwear 93.2 93.8 94.1 0.6 0.3
Transportation 131.2 130.5 130.9 -0.5 0.3
Health and personal care 119.2 119.2 119.1 0.0 -0.1
Recreation, education and reading 107.8 107.9 108.1 0.1 0.2
Alcoholic beverages and
tobacco products
148.4 148.5 149.2 0.1 0.5
Special aggregates
Core CPI 123.6 123.8 124.1 0.2 0.2
All-items CPI excluding
food and energy
119.5 119.6 119.8 0.1 0.2

 

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