Canadian Personal Finance Blog

OK, so I was wrong (again) the price of gasoline is not driving up prices in Canada, in fact the rate of increase in pricing is decreasing (which is to say, prices ARE going up, just not that fast). Stats Canada is now saying that the Consumer Price Index increased by 1.8% year over year for February 2008, which is astounding, given the price of gasoline.

The main reason seems to be the strength of the Canadian dollar and it’s effects on the prices of other mainstream products (the price of cars is actually dropping). Some highlights are:

• Energy prices were up 9.7% year over year, which is no surprise and this was the highest increase by area.
• Clothing and footwear actually dropped by 1.4% which is a reflection of a strong dollar.
• Shelter costs were up 4.1% and Services were up 3.5% which is interesting but all other areas had much smaller increases in prices.

An interesting point brought forward about Ontario in specific:

Ontario consumers experienced the fastest slowdown in consumer prices in the 12-month period to February 2008.Consumer prices rose 1.5% on average in Ontario during this period, compared with 2.1% in January. A slower rise in gasoline prices was mainly responsible for this loss of momentum. Pump prices rose only 14.8% in February, compared with 26.0% in January.

The 12-month growth in consumer prices was especially strong in Alberta (+3.5%) and Saskatchewan (+3.4%). British Columbia consumers experienced the most modest price gain (+1.1%). This is mainly a reflection of the smallest 12-month rise in gasoline prices (+11.3%).

I guess it wouldn’t surprise someone living in Fort McMurray to hear that it is expensive to live in Alberta?

Fed To Lower Another Rate

The Fed in the U.S. is talking about lowering yet another rate to attempt to alleviate the financial sense of despair and malaise in the U.S. economy. Soon, they may give you money to borrow money? No wait, that is how we ended up in this predicament.

Up slightly from October’s year over year rate of 2.4% the Consumer Price Index is now at 2.5% for November (year over year), with Gasoline prices and Mortgages leading the major cost increase areas.

The interesting quote from Stats Canada was:

However, the Bank of Canada’s core index, used to monitor the inflation control target, rose only 1.6%, posting its slowest 12-month increase since April 2006.

This means that the Bank of Canada is not likely to react to this inflation hike with an interest rate hike in January? We can only hope that is the case.

Tomorrow back to the land of personal finance, but inflation is something I view that directly affects (effects?) my day to day life and like to comment on it every month.

CPI for October at 2.4%

Gas, mortgage interest and home repair and replacement costs were the major reasons for the price increase. If Gas has stayed steady, the real inflation would have been 1.9% for the same period (year over year), but thanks to continually soaring gas prices, Inflation is running at 2.4% year over year.

Will this cause a lowering of interest rates? With the rate continuing to stay within the area that the bank of Canada wants it to be, it will not cause a rate increase, however, with the swooning Loonie, that interest rate drop might not happen either.

Sin areas continue to have healthy price increases as well (smoking and alcohol), but Energy is easily the biggest jump in the Stats Can “basket of goods” that they use to calculate the Consumer price index.

Tomorrow

• Back to the quarterly personal finance status report, how to do it

Weaker Gasoline prices is the reason given, but I am still stymied by the fact that inflation is dropping even with gas prices at $1.00 per liter again.

Now inflation is the measure of how much things have risen in price, not that things are expensive in the first place, so I guess this makes sense, but more expensive fuel should be rippling through prices in the economy, however that does not seem to be happening?

Here is the break down on things for you who love numbers.