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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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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Food Prices up 4.1% For 2015 in Canada


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To the surprise of absolutely no one in Canada who has walked into a grocery store lately, Stats Canada announced on Friday that the Inflation rate (year over year) for December 2015 (and thus effectively the year 2015) rate of inflation was 1.6%, which seems gosh darn just grand, but as usual this smelly onion’s aroma is only divulged as you look deeper in the layers of the numbers published.

Cauliflower” by User Anthony DiPierro on en.wikipedia – Licensed under Public Domain via Commons

As we can see from this simple graphic, the numbers are a little cock-eyed if you look a little closer to the details of the report. In the gory details of the report you find a much richer explanation of what is going on in terms of the price of food:

Consumers paid 3.7% more for food in December compared with the same month a year earlier. Prices for food purchased from stores were up 4.1% year over year in December, following a 3.7% increase the previous month. The acceleration was mainly attributable to the fresh vegetables and fresh fruit indexes, which rose more on a year-over-year basis in December than in the previous month. In contrast, the meat index increased less in the 12 months to December (+2.4%) than in November (+3.9%). Prices for food purchased from restaurants rose 2.8% year over year in December, matching the increase in November.

A more detailed part of the report goes into even more interesting details:

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

Main upward contributors:

  1. Purchase of passenger vehicles (+3.1%)
  2. Fresh vegetables (+13.3%)
  3. Homeowners’ home and mortgage insurance (+8.9%)
  4. Fresh fruit (+13.2%)
  5. Electricity (+3.8%)

Main downward contributors:

  1. Gasoline (-4.8%)
  2. Natural gas (-12.9%)
  3. Telephone services (-2.5%)
  4. Mortgage interest cost (-1.3%)
  5. Fuel oil (-16.8%)

Hence all of the discussions about the head of Cauliflower costing $8 in some places? The serious part of this, is that homeless shelters and similar services are now having problems with their food budgets for the winter. The fact that home and mortgage insurance rates are spiking is another interesting issue that not many folks are talking about?

Bank of Canada’s core index

Remember that the Bank of Canada’s measure of inflation is a bit different, and as they are the ones that might raise interest rates in response to any inflationary spirals, we should check what they think about inflation.

The Bank of Canada’s core index was up 1.9% in the 12 months to December, following a 2.0% rise in November.

Reports from Previous Months in 2015

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

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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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