Gasoline Pushed Inflation to 2.1 %

The January Consumer Price Index numbers came in from Stats Canada and it seems like gasoline pushed inflation to 2.1 % year over year in January. A rate of 2.1% enters the Bank of Canada worrisome zone. Using the Bank of Canada’s measures things are not as worrisome. If you check the Bank’s site, their numbers show below 2.0% which is in their “acceptable” zone.

Highlights for January

Main contributors to the 12-month change in the CPI, Main upward contributors:

  1. Gasoline (+20.6%)
  2. Purchase of passenger vehicles (+3.8%)
  3. Homeowners’ replacement cost (+4.3%)
  4. Natural gas (+15.6%)
  5. Food purchased from restaurants (+2.3%)

Main downward contributors:

  1. Fresh vegetables (-15.5%)
  2. Fresh fruit (-10.8%)
  3. Meat (-1.7%)
  4. Bakery products (-3.2%)
  5. Cereal products (excluding baby food) (-5.3%)

Great news there in that fresh fruit and veggies are lower in price. We should all be eating a bit more healthy this month! The very bad news is Gas and Natural Gas prices sky-rocketing. Might want to turn the furnace down a little, and look at those hybrids again?

Historical Electricity Prices?

Stats Canada added a fun historical section, and this month, electricity prices.

Electricity has maintained approximately the same basket weight for the past 30 years. Since the basket update in 1986, the basket weight for electricity has ranged from 1.93% to 2.77% of the all-items CPI, and averaged 2.43%.

Given how much electricity prices have shot up in Ontario, wonder if this remains true?

Graph of the Month

CPI with and without gasoline prices is always an exciting graph to check out.

Gasoline Pushed Inflation

CPI or Inflation with and without gasoline included

2017 Inflation Discussion

So far 2017 has only one discussion:



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Energy Up 4.0 % for 2016

Stats Canada on Friday published their year-end Consumer Priced Index. These numbers show us what kind of year 2016 was. The most interesting index increase is Canadians paid 4.0% more for Energy in 2016, and Ontarians had a ludicrous price jump for the price of electricity.

Overall the CPI (or inflation) year over year growth ending in December is 1.5%, which is still below the Bank of Canada’s barometer range (starting at 2.0%). This does not mean the B of C won’t raise interest rates, just that inflation won’t be the reason sited.

The Energy index includes Gasoline, Electricity and other essentials,  and as mentioned. For Ontarians Energy was particularly noticeable as Electricity is up 11.2% year over year ending in December. Yes, that is a double digit increase, so Inflation in Ontario year over year is actually 2.0%.

Prices by Category

By Category we can see the monthly changes in this graphic:

energy up

Transportation is big , note Energy is not mentioned here

Special Aggregate Table

This does show Energy, and you can see how Energy and Gasoline prices are up big year over year.

Relative importance December
2015
December
2016
December 2015 to December 2016
% (2002=100) (2002=100) % change
Special aggregates
All-items excluding energy 92.21 125.0 126.6 1.3
Energy 7.79 143.4 149.1 4.0
Gasoline 3.84 142.7 150.6 5.5
All-items excluding food and energy 75.80 121.3 123.5 1.8
Goods 46.68 116.3 117.4 0.9
Services 53.32 136.8 139.5 2.0

Detailed Highlights

From the CPI detailed report we can get a nice set of highlights about what cost more year over year.

 

Main contributors to the 12-month change in the CPI:

Main upward contributors:

  1. Gasoline (+5.5%)
  2. Homeowners’ replacement cost (+4.3%)
  3. Purchase of passenger vehicles (+2.6%)
  4. Food purchased from restaurants (+2.3%)
  5. Electricity (+3.6%)

Main downward contributors:

  1. Food purchased from stores (-2.8%)
  2. Children’s clothing (-4.5%)
  3. Video equipment (-5.8%)
  4. Travel tours (-1.6%)
  5. Mortgage interest cost (-0.3%)

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Shocking Electricity Price in August (CPI Canada)

The game of numbers, known as the Consumer Price Index from Stats Canada (for August), continue to show an optimistic story on the surface, and a more interesting one underneath the sheets (CPI Canada). (Remember: Lies, Damn Lies and Arithmetic)

The following two lines from the report outline things nicely:

The Consumer Price Index (CPI) rose 1.1% on a year-over-year basis in August, following a 1.3% gain in July.

Excluding gasoline, the CPI Canada was up 1.7% year over year in August, after posting a 1.9% increase in July.

Without gasoline, numbers are still not bad, but then have a look at the data in detail, where you find out that year over year, Electricity rates are up 5.2% (across Canada). In Ontario, I am sure it is even bloody higher!

Main contributors to the 12-month change in the CPI:

Main upward contributors:

  1. Purchase of passenger vehicles (+5.2%)
  2. Homeowners’ replacement cost (+4.0%)
  3. Electricity (+5.6%)
  4. Food purchased from restaurants (+2.5%)
  5. Air transportation (+5.7%)

Main downward contributors:

  1. Gasoline (-11.5%)
  2. Natural gas (-9.9%)
  3. Travel tours (-5.6%)
  4. Telephone services (-1.2%)
  5. Fuel oil (-11.8%)

See, if you look at the numbers close enough, you can really depress the hell out of yourself.

CPI by Category

CPI by Category for Past 12 Months

Bank of Canada’s core index

The Bank of Canada’s core index increased 1.8% year over year in August, following a 2.1% gain in July.

The importance of this, is that while this is still within the Bank of Canada’s “comfort zone” for inflation, interest rate increases may still happen (you just can’t blame it on Inflation (directly)). Also remember, the Governor of the Bank stated, Lower-for-longer interest rates require adjustments, better read what needs to happen to keep rates low (your sphincter might tighten a little).

Inflation in Canada

Bank of Canada Operational Guide for Inflation

Reports from the Past While.

If you want to have a walk down memory lane about how prices have gone up, here you go.

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Electricity Prices Continue to Sizzle in July

If you glance at the report from Stats Canada you will see the usual fairly good news in terms of the Consumer Price Index for July: (except for electricity prices)

The Consumer Price Index (CPI) rose 1.3% in the 12 months to July, after increasing 1.5% in June.

This sounds heartening (having grown up in the days of inflation running at 11% or higher), but again, you have to peel the onion to get a better view of what is really happening.

Main contributors to the 12-month change in the CPI:

Main upward contributors:

  1. Purchase of passenger vehicles (+5.4%)
  2. Homeowner’s replacement cost (+3.6%)
  3. Electricity (+5.4%)
  4. Food purchased from restaurants (+2.7%)
  5. Air transportation (+7.1%)

Main downward contributors:

  1. Gasoline (-14.0%)
  2. Natural gas (-10.3%)
  3. Fuel oil (-13.4%)
  4. Mortgage interest cost (-0.7%)
  5. Children’s clothing (-4.1%)

So this data shows that Electricity (the alleged energy of the future) keeps going up in price, and Gasoline prices continue to obfuscate the Inflation data. In Ontario electrical rates are very high and will be going up

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

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

As you can see from the graphic, gasoline continues to skew the data badly. The interesting other things that are lowering the index is Mortgage Interest Costs, which won’t slow down the scorching hot summer Real Estate market in many cities.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.1% in the 12 months to July, matching the rise in June.

This is still in the zone where the bank may not take Interest Rate action, but note that the Bank’s rate is significantly higher than the Stats Canada rate.

Inflation in Canada by Category

Inflation by Category for July

Reports from the Past While.

If you want to have a walk down memory lane about how prices have gone up, here you go.

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Zap Electricity Prices Pushes Inflation in June

Stats Canada announced on Friday their monthly CPI report for June 2016, with the following two points (no mention of the zap electricity part of things):

  • The Consumer Price Index (CPI) rose 1.5% in the 12 months to June, matching the gain in May.
  • Excluding gasoline, the CPI was up 1.9% year over year in June, matching the increase in May.

This cursory overview suggests things are as usual in terms of inflation, however, if you read the detailed June Report, (about the Inflation Rate in Canada) you see a few more telling truths (to turn your financial stomach).

I like this part of the detailed report where we find out what major parts of the categories are contributing to higher prices, the electricity zap is quite noticeable.

Main upward contributors:

  1. Purchase of passenger vehicles (+5.6%)
  2. Electricity (+6.9%)
  3. Homeowner’s replacement cost (+3.5%)
  4. Food purchased from restaurants (+2.6%)
  5. Air transportation (+5.1%)

Main downward contributors:

  1. Gasoline (-8.5%)
  2. Natural gas (-12.5%)
  3. Mortgage interest cost (-1.3%)
  4. Fuel oil (-13.2%)
  5. Dairy products (-2.1%)

As usual we see that Fossil Fuels are big downward contributors (although now in Ontario, we will have a Carbon Tax, which will then have the HST on top of it, so that might change here).

zap electricity Inflation in Canada with and without Gasoline

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

Bank of Canada’s core index:

The Bank of Canada’s core index increased 2.1% in the 12 months to June, matching the rise in May.

The Bank of Canada has been saying that inflation is “under control” (for now), but my guess is the fragility of the world economy (and Canadian economy) will continue to keep interest rates lower (for now).

Reports from the Past While.

If you want to have a walk down memory lane about how prices have gone up, here you go.

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