Inflation and Silly Gasoline Tricks Continues in August

On Friday our friends from Stats Canada published their monthly report on the Consumer Price Index for August 2015, and their findings are similar to those from earlier months in 2015.

The Consumer Price Index (CPI) rose 1.3% in the 12 months to August, matching the increase in July…. Lower energy prices continued to moderate the year-over-year rise in the CPI, led by the gasoline index, which was down 12.6% year over year in August.

So the story continues with many areas rising by a fair amount, while gasoline dampens the overall index.

Consumer Price Index

CPI with and without energy for past 5 years

As you see we are closer to 2.0% inflation, than we are the “actual” 1.3%. Food is up 3.6% (year over year), which impacts most Canadians, but due to Energy and Transport being down 7.2% and 2.3% no one seems to notice that feeding ourselves continues to be an ever-increasing commodity. Doesn’t even seem to be an election issue, haven’t heard anybody talk about it.

This graphic is useful to see how the numbers are skewed:

CPI by category

What was Cheaper and what was more expensive

Bank of Canada’s core index

Just remember that the bank of Canada uses their own data to calculate inflation, and there numbers are more telling:

The Bank of Canada’s core index was up 2.1% in the 12 months to August, following a 2.4% rise in July

CPI from Bank of Canada Graphic

It is interesting that this is really not a topic on the election trail.

Reports from Previous Months in 2015


Gas Dampens CPI for July

For yet another month the lowering price of gasoline and transport continues to dampen (and possibly hide) a CPI that has been around 2.0 % or higher for a long time (yet it continues to be called 1.0%, fun eh?). Stats Canada stated for July:

Lower energy prices continued to moderate the year-over-year rise in the CPI; however, the effect was less pronounced in July than in the previous month. In particular, the gasoline index was down 12.2% in the 12 months to July, compared with a 14.1% decrease in June.

I am sick of how these numbers are being used to hide the fact that inflation is high enough that interest rate controls on them should have been triggered months ago, but due to Canada’s population being Debt Junkies the government is too petrified of what this might entail. The other side of the coin is with oil revenues dropping, and gas prices dropping Canada is paying the price as well.

I am simply being paranoid? Maybe, but if you look at this graph, you will see my statement about 2.0% inflation (without gasoline) is maybe not as much me being paranoid, as being prudent:

CPI for past while

CPI for past little while, with and without energy

I think the center of my vitriolic commentary centers around the numbers is the following statement:

Food prices advanced 3.2% in the 12 months to July, following a 3.4% increase the previous month. Prices for food purchased from stores were up 3.5% on a year-over-year basis in July. The increase in the food index was led by meat prices, which rose 6.1% year over year in July, following a 6.6% increase in June. Additionally, prices were up year over year in July for fresh vegetables and fresh fruit. Prices for food purchased from restaurants rose 2.7% in the 12 months to July.

Food has been over 3% growth for a good long time, and anybody who shops for food knows this, but nothing is being done about it, and the press dismisses it because gas is so darn cheap? You know what really galls me the most? None of the major party leaders have even batted an eye about this.

Bank of Canada’s core index

The nice thing about the Bank of Canada, is their index doesn’t include energy:

The Bank of Canada’s core index was up 2.4% in the 12 months to July, following a 2.3% rise in June.

Food for thought?

The Big Graph

This graphic does an excellent job showing what is really up, and what is keeping the CPi down:


Year over Year CPI

Interesting that Transportation is the only one down?


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Inflation at 0.9% for May (maybe)

A week ago Stats Canada published their Consumer Price Index for the year ending May 2015, and the number they published was that the basket of articles that make up the CPI were up 0.9% year over year.

Given that Food is up it’s normal 3.8% year over year, how is the index only up 0.9%? You guessed it, Gas and energy prices (that complete Index was down 11.8% year over year):

  • Gasoline was down 17.4% year over year, but that will be changing with Gas prices going back up this month.
  • Natural Gas was down 14.4% for the year ending in May as well (not sure about those prices whether they are going up and such).
  • It’s not all good news though, Electricity is up 1.0% so not all of the energy index is down

Without this portion of the index, the actual CPI is up 2.2% year over year. More fun with numbers folks.

CPI with and without Energy

The CPI with and without Energy for the Past Little While

As this graph shows, the real CPI has been running about 2.0% or higher for a while. To see a better graph on what parts are going up and down, I present this interesting piece of data:

CPI components for past little while

The constituent parts and their increase (or decrease)

Bank of Canada’s core index

As we all know, the CPI by itself is only data, however, the system that uses this data (or one of them) is the Bank of Canada, and they will adjust interest rates accordingly, if they feel that inflation is “out of control”, so what does the Bank of Canada think ?

The Bank of Canada’s core index increased 2.2% in the 12 months to May, after rising 2.3% in April.

Bank of Canada CPI

Bank of Canada’s Current CPI, still within norms

CPI Reports for 2015 so far

The reports for this year so far:


Prices up 0.8% in April or More Fun with Numbers

Apologies for the tardiness on this (family fun on the weekend caused me to miss this until today), but our amigos at Stats Canada published on Friday the April Consumer Price Index Numbers and if you include the price of gasoline the CPI for the year ending in April 2015 is up 0.8%, which sounds just wonderful (doesn’t it?).

For your monthly dose of “Fun with Numbers”, the second paragraph of the report outlines things nicely:

The smaller year-over-year increase in the CPI in April compared with March was mostly attributable to lower energy prices. Excluding energy, the CPI increased 2.2% on a year-over-year basis in April, following a 2.3% increase the previous month.

So inflation is really running at 2.2% ? Yes and no, which is always the best answer, because you are never wrong.

Fun with pictures?

CPI with and without Energy

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

The sad part of this is the ability for all of the Federal Political Parties to interpret this data in their own way, and thus making it a veritable cornucopia of confusion.

Another useful graphic to show just how “jerking back and forth” (to quote Devo) the Index is working:

Prices increase in seven of eight major components

Prices increase in seven of eight major components

Clear as mud, correct? You can see Gasoline dropping, but you can also see that Food prices are leading the charge on the increase side of things, which is never a good thing (unfortunately booze is there as well, so we can’t eat or enjoy our sins).

Bank of Canada’s core index

Surely the Bank of Canada will have a clear statement? Yes, and we are in the middle of their “sweet spot” for inflation, but if it gets above 3.0% we might see Interest rate hikes:

The Bank of Canada’s core index increased 2.3% in the 12 months to April, after rising 2.4% in March.

The seasonally adjusted core index was unchanged on a monthly basis in April, following a 0.4% increase in March.

Luckily they also have a snazzy graphic to help with that as well:

Bank of Canada View of Core CPI

Core CPI in the Bank of Canada View

CPI Reports for 2015 so far

The reports for this year so far:


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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