With Summer coming very soon (on Sunday in fact), and Father’s Day on the same day this weekend looks to be an eventful one for us all.
Financially the week has seen the Nortel CEO Mike Z. standing in front of a group of Canadian politicians and saying, “It simply wasn’t feasible to pay severance,” , you have to respect his chutzpah, but when he started saying he might not get his sweetheart pension, I think he lost all credibility. With the CPI at 0.1% we are in interesting areas where allegedly our prices are not rising, yet the price of food is up 7.1% over 12 months, so the numbers are actually hiding a big issue (i.e. the poor and fixed income folks dealing with huge food price increases). Evidently this means our interest rates may stay as low as they are for a while longer, which is just wild (IMHO).
Some interesting posts from my regular reads on the Financial blogging front:
Stay tuned this weekend, there may not be a video interlude, but there might be something even more interesting. Enjoy the start of summer and remember to call your Dad on Father’s Day!
Stats Canada published their May 2009 numbers today and it is up but only 0.1% over the previous twelve months, which is good to see (for those of us who worry about inflation). This means that prices are supposedly only up 1/10 of 1% over the previous twelve months (as close as you can get to ZERO (without being zero)).
The number is a little deceiving since the report does say:
The slowdown in the 12-month Consumer Price Index (CPI) was primarily the result of an 18.3% year-over-year price drop for energy products. Excluding energy, the CPI rose 2.3%.
Thus without the drop in gas and energy prices CPI is actually around 2.3% which sounds more realistic. With the spiking of gas and oil prices for the summer this could make for more interesting numbers in the coming months, unfortunately.
The following graph is even more interesting and shows just how volatile gas prices have been for the past little while:
So how did all of this break down? Energy prices down a great deal, however, food prices are UP a large amount as well, so we have two volatile components in the index, whereas most other components are quite calm.
This does not bode well for those on fixed incomes having to deal with higher food prices (as well as those that are living near the poverty line).
As usual I am including the “big table” to show you the components of the CPI and where the biggest jumps are:
| Relative importance | May 2008 | May 2009 | April 2008 to April 2009 | May 2008 to May 2009 | |
|---|---|---|---|---|---|
| Unadjusted | |||||
| % change | |||||
| All-items | 100.00 | 114.6 | 114.7 | 0.4 | 0.1 |
| Food | 17.04 | 114.6 | 121.9 | 7.1 | 6.4 |
| Shelter | 26.62 | 121.6 | 121.4 | 0.2 | -0.2 |
| Household operations and furnishings | 11.10 | 104.3 | 107.6 | 2.8 | 3.2 |
| Clothing and footwear | 5.36 | 93.0 | 93.9 | 0.8 | 1.0 |
| Transportation | 19.88 | 123.6 | 113.5 | -8.0 | -8.2 |
| Health and personal care | 4.73 | 108.6 | 112.1 | 2.6 | 3.2 |
| Recreation, education and reading | 12.20 | 102.9 | 103.8 | 0.8 | 0.9 |
| Alcoholic beverages and tobacco products | 3.07 | 127.4 | 131.2 | 2.4 | 3.0 |
| All-items (1992=100) | 136.4 | 136.6 | 0.3 | 0.1 | |
| Special aggregates | |||||
| Goods | 48.78 | 110.4 | 108.1 | -2.0 | -2.1 |
| Services | 51.22 | 118.7 | 121.3 | 2.5 | 2.2 |
| All-items excluding food and energy | 73.57 | 110.3 | 111.7 | 1.2 | 1.3 |
| Energy | 9.38 | 158.4 | 129.4 | -17.5 | -18.3 |
| Core CPI | 82.71 | 111.5 | 113.7 | 1.8 | 2.0 |
Just in time for your vacation, Gasoline at $1 per litre is coming to a gas station near you. What is causing this return to last summer’s prices? No real reason, no huge jump in demand, or huge drop in supply, simply prices wandering their way back up. If anyone can explain to me why this price increase is happening, I’d be glad to hear it, but for now it seems like Gas companies are looking to fortify their incomes for the summer.
Surely Oil prices must be going up?
Certainly don’t see anything in that graph that suggests why prices are creeping up, guess the price of Oil doesn’t have much reflection on the price of Gasoline.
Luckily gas prices don’t affect any other prices, like food or the like.
The government announced new CPP rules starting in 2012, where if you “retire” early at 60 you won’t have to quit your job to get your CPP payments, which is interesting. The change also comes with a catch, where normally at 60 your CPP benefits are reduced by about 30% (from what you would receive at 65), however under the new plan this reduction will now be 36% drop, so there is a catch.
This is in reaction to the number of Canadians who do NOT have a pension (other than the CPP), so a step in the right direction, but is it enough?
Oh, and the deficit for this year’s budget is goinig to be MUCH bigger, in case you were curious too (Yikes).
Stats Canada published the CPI numbers yesterday and it was surprisingly low, at 0.4% for the entire 12 month period ending in April 2009. If you don’t count food the CPI was actually down by 1.1% over the previous 12 months, however if you don’t count energy the actual inflation is up 2.4% which just goes to show that food and energy are major standard deviation stretchers for the statistical data (in fact it’s not really a curve with a single Normal).
The report says about food:
Prices increases for food were widespread in the 12 months to April. Large increases were recorded for fresh vegetables (+26.0%), fresh fruit (+16.8%), cereal products (+9.6%), beef (+9.0%) and chicken (+9.0%).
These numbers are wild. Fresh veggies have been on the rise but the reason why is not really obvious, unless you view it as an echo of last year’s gas price gouging (which seems to be returning this summer as well).
Two significant price drops were in Energy and Transport costs in general:
Gasoline prices fell 24.7% from April 2008 to April 2009 following a 12-month decline of 21.0% in March. The 12-month decline in April was due more to high prices in 2008 than to recent developments. On a month-to-month basis, gasoline prices rose 1.0% from March to April….
…. Natural gas prices fell 17.5% in the 12 months to April, following a 9.5% increase in March. Natural gas prices fell in most provinces, especially in Alberta and Ontario, where large drops largely accounted for the overall decrease…..
This explains why my Natural Gas bill is dropping, but Gasoline prices are starting to creep back up to $1 per liter again, even with little pressure on supplies, wonder why?
| (2002=100) | |||||
|---|---|---|---|---|---|
| Relative importance2 | April 2008 | April 2009 | March 2008 to March 2009 | April 2008 to April 2009 | |
| Unadjusted | |||||
| % change | |||||
| All-items | 100.003 | 113.5 | 113.9 | 1.2 | 0.4 |
| Food | 17.04 | 113.5 | 121.6 | 7.9 | 7.1 |
| Shelter | 26.62 | 121.2 | 121.4 | 2.1 | 0.2 |
| Household operations and furnishings | 11.10 | 104.4 | 107.3 | 2.6 | 2.8 |
| Clothing and footwear | 5.36 | 94.3 | 95.1 | -0.3 | 0.8 |
| Transportation | 19.88 | 120.1 | 110.5 | -6.2 | -8.0 |
| Health and personal care | 4.73 | 108.3 | 111.1 | 2.4 | 2.6 |
| Recreation, education and reading | 12.20 | 101.6 | 102.4 | 0.5 | 0.8 |
| Alcoholic beverages and tobacco products | 3.07 | 126.7 | 129.7 | 2.4 | 2.4 |
| All-items (1992=100) | 135.1 | 135.5 | 1.2 | 0.3 | |
| Special aggregates | |||||
| Goods | 48.78 | 109.2 | 107.0 | -0.5 | -2.0 |
| Services | 51.22 | 117.7 | 120.7 | 2.8 | 2.5 |
| All-items excluding food and energy | 73.57 | 109.9 | 111.2 | 1.4 | 1.2 |
| Energy | 9.38 | 150.2 | 123.9 | -11.2 | -17.5 |
| Core CPI4 | 82.71 | 111.2 | 113.2 | 2.0 | 1.8 |