Canadian Personal Finance Blog

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.

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 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:

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:

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).

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.

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

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.

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).

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)

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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.

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).