Canadian Personal Finance Blog

Personal Finances and Consumer Concerns, essays, stories, examples and how to articles with a distinctly Canadian Point of View

Inflation up 1.9% Hold on Bumpy Ride Ahead!

Friday, February 19th, 2010

Reader’s Note: Random Thoughts will return next week.

Also, watch for the First Big Cajun RRSP Software Giveaway! Coming real soon (once I figure out how it is going to work :-) ).

Gasoline Pumps Inflation

Stats Canada announced the CPI for January and it looks like Inflation is starting to become more of a factor for the Bank of Canada to think about. Year over year for January Consumer Prices were up 1.9% (remember that in December year over year it was 1.3%), so the 0.6% jump is a big one.

Inflation Graph

Black Gold, Texas Tea

Yes, it is Gasoline prices that are helping fuel this inflationary jump, and this could mean follow on price increases as this price increase percolates through the system.

The increase in the all-items Consumer Price Index (CPI) was due primarily to gasoline prices. In January, gasoline prices were 23.9% higher than they were in January 2009. This follows a 25.6% rise in the 12 months to December 2009.

Gasoline Graph

Gasoline prices exerted upward pressure on the CPI for the third consecutive month, as a result of price volatility in the second half of 2008 and the first half of 2009. Prices at the pump have been relatively stable since July 2009.

More importantly the Bank of Canada’s Core rate (which is what they start looking at for when they wish to increase interest rates) is now around 2.0% (year over year) up from 1.5% in December, which may cause the Bank of Canada think tank to start re-thinking when they plan on turning on the Interest Rate economy brakes, which most think is June July timeframe, but if we see another Inflationary jump next month, it may be sooner.

The Big Table of CPI

For those who love details and numbers, I present the Big Table for your perusal:

Relative importance Jan-09 Dec-09 Jan-10 Dec 2009 to Jan 2010 Jan 2009 to Jan 2010
% change
All-items 100.002 113 115 115.1 0.3 1.9
Food 17.04 120.6 121.8 122.3 0.4 1.4
Shelter 26.62 123.1 121.3 121.8 0.4 -1.1
Household operations, furnishings and equipment 11.1 105.7 107.5 107.9 0.4 2.1
Clothing and footwear 5.36 91.8 90.6 90.1 -0.6 -1.9
Transportation 19.88 108.8 115.5 117.2 1.5 7.7
Health and personal care 4.73 110.4 113.2 113.8 0.5 3.1
Recreation, education and reading 12.2 99.7 102.8 101.1 -1.7 1.4
Alcoholic beverages and tobacco products 3.07 129.2 131.2 131.1 -0.1 1.5
All-items (1992=100) 134.5 136.6 137 0.3 1.9
Goods 48.78 106.2 107.6 108.4 0.7 2.1
Services 51.22 119.7 121.8 121.8 0 1.8
All-items excluding food and energy 73.57 110.3 111.7 111.6 -0.1 1.2
Energy 9.38 123.8 130.3 133.9 2.8 8.2
Core CPI 82.71 112.2 114.3 114.4 0.1 2

More on this topic (What's this?)
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Inflation Edges Up in December 2009

Thursday, January 21st, 2010

Stats Canada announced the CPI numbers for December and for all of 2009 and the trend started in November got a little more momentum with the CPI for 2009 being 1.3% (over 12 months), and Gasoline sits front and center again as an issue.


The rise in the all-items Consumer Price Index (CPI) was due primarily to gasoline prices, which exerted upward pressure on the CPI for the second consecutive month. This follows an extended period in which they were the main contributors to year-over-year declines in overall consumer prices.

For the year the big price jumpers were:

  • Energy given we are back at $1 per liter this is no surprise there
  • Transportation given gas prices again, no surprise, although the cost of mass transit is going up a lot too
  • Health and Personal Care this one really worries me, if health care costs keep doubling the average on inflation, we older folks might be in trouble come retirement time
  • Alcoholic Beverages not as high as health care, but you can at least give us a chance to drown our sorrows? C’mon!!!

See the big table for the numbers.

The Big CPI Table

I really like this table because it shows you all the ugly numbers together:

Consumer Price Index and major components, Canada (2002=100)
Relative import1 Dec
2008
Nov
2009
Dec
2009
Nov to Dec 2009 Dec
2008 to Dec 2009
Unadjusted
% change
All-items 100.002 113.3 115.2 114.8 -0.3 1.3
Food 17.04 119.8 121.5 121.8 0.2 1.7
Shelter 26.62 123.4 121.3 121.3 0.0 -1.7
Household operations, furnishings and equipment 11.10 105.5 108.5 107.5 -0.9 1.9
Clothing and footwear 5.36 91.3 95.1 90.6 -4.7 -0.8
Transportation 19.88 110.3 115.4 115.5 0.1 4.7
Health and personal care 4.73 109.9 113.6 113.2 -0.4 3.0
Recreation, education and reading 12.20 101.2 103.7 102.8 -0.9 1.6
Alcoholic beverages and tobacco products 3.07 128.7 131.3 131.2 -0.1 1.9
All-items (1992=100) 134.9 137.2 136.6 -0.4 1.3
Special aggregates
Goods 48.78 106.5 108.6 107.6 -0.9 1.0
Services 51.22 120.1 121.8 121.8 0.0 1.4
All-items excluding food and energy 73.57 111.0 112.2 111.7 -0.4 0.6
Energy 9.38 123.0 132.4 130.3 -1.6 5.9
Core CPI3 82.71 112.6 114.7 114.3 -0.3 1.5
2005 CPI basket weights at April 2007 prices, Canada, effective May 2007. Detailed weights are available under the Documentation section of survey 2301 (www.statcan.gc.ca/imdb-bmdi/index-eng.htm).
Figures may not add to 100% due to rounding.
The measure of Core Consumer Price Index (CPI) excludes from the all-items CPI the effect of changes in indirect taxes and eight of the most volatile components identified by the Bank of Canada: fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuel; gasoline; inter-city transportation; and tobacco products and smokers’ supplies. For additional information on Core CPI, consult the Bank of Canada website (www.bankofcanada.ca/en/inflation/index.htm).


Choose Your QuickTax for the 2009 Tax Year

More on this topic (What's this?)
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Read more on Consumer Price Index - CPI (CPIS), Inflation at Wikinvest

How do you spell INFLATION?

Friday, December 18th, 2009

CPI Going Up

Stats Canada published the November Consumer Price Index numbers yesterday and it is starting to get some momentum in the UP direction, with their index going up by 1.0% (year over year ending in November 2009).

CPI Numbers for 2009


The rise in the all-items Consumer Price Index (CPI) was due primarily to gasoline prices. Prices at the pump are now exerting upward pressure on the CPI after an extended period in which they were the main contributors to year-over-year declines in overall consumer prices.

Interesting that gas prices in December seem to be dropping, so how this changes next month’s CPI remains to be seen.

Gas is back

Bank of Canada’s Core Index

More importantly the Bank of Canada’s Core Index is up 1.5% year over year, which is starting to push inflation into the target zone for the Bank. If this upward pressure continues, this may push the bank to act sooner with an Interest Rate increase to hopefully put the brakes on any Inflationary explosion.

The Big Table

Consumer Price Index and major components, Canada1
(2002=100)
Relative importance2 November 2008 November 2009 October 2008 to October 2009 November 2008 to November 2009
Unadjusted
% change
All-items 100.003 114.1 115.2 0.1 1.0
Food 17.04 119.5 121.5 2.3 1.7
Shelter 26.62 123.4 121.3 -1.6 -1.7
Household operations, furnishings and equipment 11.10 105.5 108.5 2.6 2.8
Clothing and footwear 5.36 94.1 95.1 0.6 1.1
Transportation 19.88 113.2 115.4 -3.1 1.9
Health and personal care 4.73 110.1 113.6 3.4 3.2
Recreation, education and reading 12.20 101.9 103.7 1.5 1.8
Alcoholic beverages and tobacco products 3.07 128.5 131.3 2.7 2.2
All-items (1992=100) 135.8 137.2 0.1 1.0
Special aggregates
Goods 48.78 108.1 108.6 -1.7 0.5
Services 51.22 120.0 121.8 1.8 1.5
All-items excluding food and energy 73.57 111.3 112.2 1.3 0.8
Energy 9.38 130.7 132.4 -12.7 1.3
Core CPI4 82.71 113.0 114.7 1.8 1.5

NB: Random Thoughts may be on hiatus for a week or two, given the season coming up, or there might be a special Monday edition, if I feel exceptionally lazy next week.

Blinky Lights Eh

Christmas Laziness and Cheer

I am planning on doing a Top 10 postings for the Christmas/New Year stretch (given I may or may not be around), so if you have any suggestions for this kind of a list (top 10 for this year), please leave a comment with a title or story you may have particularly liked (written by me, that is).

Indications Are Good Again

Wednesday, December 16th, 2009

As the Magic 8-Ball tells us (OK Stats Canada tells us, but it sounds like the Magic 8-Ball), indications are good that the economy may be turning around. Yesterday stats Canada announced that the Leading Indicators jumped 1.3% , which suggests things may be turning around slowly in our economy.

The index seems a bit of a mish-mash of a lot of information, but as usual if you read closer you’ll see that there are some very interesting tid-bits of information in there.

  • The housing index is up 2.5% from last month, which means it is costing more to buy a house, so someone must be able to buy them if the prices are going up.
  • The TSX S&P is up 2.0% from last month and if you look back to June 2009, it is up 18% over that period, which is a big number (but it did have a long way to go as well, after the great drop of ‘08)

View the full S chart at Wikinvest

Stocks and Houses

So two areas of “investment” are up a fair amount which is good, and the questions now are, will this last? We shall see is the only answer, but with stocks returning to pre-crash valuations in some areas (some will never come back folks, remember that), is it safe again? Can’t tell, and we’ll only really know looking back in a few years whether this was the start of the recovery or a “suckers rally”.

Given I bought my house a long time ago, fluctuations in it’s value mean little to me, as I don’t plan on refinancing it.

Blinky Lights Eh

Christmas Laziness and Cheer

I am planning on doing a Top 10 postings for the Christmas/New Year stretch (given I may or may not be around), so if you have any suggestions for this kind of a list (top 10 for this year), please leave a comment with a title or story you may have particularly liked (written by me, that is).

Consumer Price Index is Trending Up Again

Thursday, November 19th, 2009
Sorry but I am derailing my discussions of Risk until Monday of next week with this week’s CPI numbers coming out and the Random Thoughts for Friday.

CPI Delta Returns to Positive

Yes the CPI for October is up 0.1% year over year (as opposed to last month’s year over year which was negative), this means a modest increase overall in prices, which sounds good, but as usual the numbers may not reflect exactly what is really going on with prices in the marketplace.

CPI up to October this year

Well you might ask the question, how much did energy affect this whole thing? Have a look at this graph:

CPI with and Without Energy

CPI with and Without Energy

Six of Eight Components Up

The bad part about this is that energy still is buffering the index from reflecting real price increases in most areas of the CPI itself. Stats Canada points out:

    Major components in the CPI recording price increases in October were: food; household operations, furnishings and equipment; recreation, education and reading; health and personal care; clothing and footwear; and alcoholic beverages and tobacco products.

I am getting tired of the price gouging on SIN items like liquor and smokes (luckily lottery ticket prices aren’t going up in prices, or I’d have nothing to buy on Fridays).

Bank of Canada Core Up

The Bank of Canada’s Core rate is at 1.8% year over year, which is creeping into the “optimal” range for the Bank of Canada, but it also means that if prices go up a little bit more (as a percentage), then we might see some action from the central bank in this area (i.e. Bank Rate hikes).

The Big Table

Sept2008 to Sept2009Oct 2008to Oct 2009
Relative import October 2008 October 2009
Unadjusted
% change
All-items 100.00 114.5 114.6 -0.9 0.1
Food 17.04 117.4 120.1 2.8 2.3
Shelter 26.62 123.2 121.2 -1.8 -1.6
Household operations and furnishings 11.10 105.2 107.9 2.2 2.6
Clothing and footwear 5.36 94.4 95.0 -1.2 0.6
Transportation 19.88 117.0 113.4 -7.2 -3.1
Health and personal care 4.73 109.2 112.9 3.9 3.4
Recreation, education and reading 12.20 103.0 104.5 1.0 1.5
Alcoholic beverages and tobacco products 3.07 128.0 131.4 2.6 2.7
All-items (1992=100) 136.3 136.4 -0.9 0.1
Special aggregates
Goods 48.78 108.9 107.0 -3.7 -1.7
Services 51.22 120.0 122.1 1.8 1.8
All-items excluding food and energy 73.57 110.6 112.0 0.9 1.3
Energy 9.38 147.5 128.8 -18.7 -12.7
Core CPI 82.71 112.2 114.2 1.5 1.8

Reader’s Note: Tomorrow will be my regular Random Thoughts post, and the conclusion of my Risk and Life postings will be on Monday.

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