Friday Stats Canada put out some interesting numbers for their Consumer Price Index report for May (and the year ending in May). It was a big drop (well a drop in the rate of increase, so it’s kind of confusing), but it only rose 1.2% (year over year ending in May) and that is due to gas price increases subsiding:
Consumer prices rose 1.2% in the 12 months to May, following a 2.0% increase in April. This 0.8 percentage point difference was mostly attributable to declines for gasoline prices. Decreases in clothing prices as well as slower price gains for the purchase of passenger vehicles were also factors.
Canada continues to be at the mercy of the price of gasoline, which is also the reason the Canadian economy is so strong (an interesting dichotomy). The Canadian dollar is strong thanks to Canada being resources rich (and tar sands in specific), yet gas prices continue to yo-yo causing inflationary jumps and drops. Maybe it’s time Canada wasn’t so reliant on Gas (I jest, since I am not some granola crunching green party member)? A more interesting paragraph followed this initial statement from Stats Canada:
The energy index fell 1.6% in the 12 months to May, its first year-over-year decline since October 2009. Natural gas prices (-16.6%) continued to post declines. Gasoline prices decreased 2.3%, after 22 months of year-over-year increases. In contrast, electricity prices continued to rise.
So electricity prices are going up and everything else is kind of going down? Given what I am seeing here in Ottawa, I agree with this statement, and think electricity prices are a little out of control (here in Ontario at least).
12 Month Change in the Energy Index
Quite the roller coaster ride, but will it continue or is this a short dip leading back to the rising prices of the past 2 years? A more interesting graphic is comparing the CPI for the last little while with and without Energy included in it:
The 12-month change in the CPI and the CPI excluding energy
So things are a little more “normal” without energy, however, energy does effect prices no matter how you slice it thanks to it’s price increases rippling through other prices (like produce and anything that has to be delivered using trucks and such).
Bank of Canada’s core index
The Bank of Canada’s core index rose 1.8% in the 12 months to May, following a 2.1% gain in April. Price gains for electricity, food purchased from restaurants and meat continued to be main contributors to the year-over-year increase in the core index.
On a monthly basis, the seasonally adjusted core index was unchanged in May, after rising 0.4% the previous month.
Interesting, so the Bank of Canada think inflation is still functioning inside of its “norms”. For this month a reprieve for Bank Rates, but what will this summer bring in terms of gasoline prices?
The Big Table
As per usual I include one of the Big Tables from Stats Canada, showing more detail on all the data:
Consumer Price Index and major components, Canada - Not seasonally adjusted
to May 2012
to May 2012
|All-items Consumer Price Index (CPI)
|Household operations, furnishings and equipment
|Clothing and footwear
|Health and personal care
|Recreation, education and reading
|Alcoholic beverages and tobacco products
|All-items CPI excluding energy
|All-items CPI excluding food and energy
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 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/price-indexes/cpi).
4. The special aggregate “Energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.