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. (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 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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Zap! Electricity Prices Pushes Inflation in June

Stats Canada announced on Friday their monthly CPI report for June 2016, with the following two points:

  • The Consumer Price Index (CPI) rose 1.5% in the 12 months to June, matching the gain in May.
  • Excluding gasoline, the CPI was up 1.9% year over year in June, matching the increase in May.

This cursory overview suggests things are as usual in terms of inflation, however, if you read the detailed June Report, (about the Inflation Rate in Canada) you see a few more telling truths (to turn your financial stomach).

I like this part of the detailed report where we find out what major parts of the categories are contributing to higher prices, note Electricity giving us a big zap.

Main upward contributors:

  1. Purchase of passenger vehicles (+5.6%)
  2. Electricity (+6.9%)
  3. Homeowner’s replacement cost (+3.5%)
  4. Food purchased from restaurants (+2.6%)
  5. Air transportation (+5.1%)

Main downward contributors:

  1. Gasoline (-8.5%)
  2. Natural gas (-12.5%)
  3. Mortgage interest cost (-1.3%)
  4. Fuel oil (-13.2%)
  5. Dairy products (-2.1%)

As usual we see that Fossil Fuels are big downward contributors (although now in Ontario, we will have a Carbon Tax, which will then have the HST on top of it, so that might change here).

Inflation in Canada with and without Gasoline

The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline

Bank of Canada’s core index:

The Bank of Canada’s core index increased 2.1% in the 12 months to June, matching the rise in May.

The Bank of Canada has been saying that inflation is “under control” (for now), but my guess is the fragility of the world economy (and Canadian economy) will continue to keep interest rates lower (for now).

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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Expensive Food and Shelter in April in Canada

Friday Stats Canada published their Consumer Price Index report for April 2016 and the trend of  a deceptively low CPI increase of 1.7% caused by lower energy and gasoline prices (without Gasoline CPI is up 2.0%). That is what you will find from the summary posted on the Stats Canada website, but as we have learned, if you dig a little deeper, you find many more interesting tidbits of information.

CPI

The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline for Past 5 Years

The detailed report goes into a little more detail and gives us the following interesting specifics.

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

Main upward contributors:

  1. Purchase of passenger vehicles (+4.6%)
  2. Electricity (+6.5%)
  3. Food purchased from restaurants (+2.7%)
  4. Fresh vegetables (+11.7%)
  5. Homeowners’ replacement cost (+2.3%)

Main downward contributors:

  1. Gasoline (-5.8%)
  2. Natural gas (-12.8%)
  3. Mortgage interest cost (-1.5%)
  4. Fuel oil (-19.3%)
  5. Passenger vehicle insurance premiums (-0.9%)

As we have been seeing for the past few months, eating fresh healthy food is still bloody expensive. On the positive side (and in contradiction to the Ontario Government’s new view on Energy), Natural Gas being cheaper should help the sale of Natural Gas clothes driers and fireplaces.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.2% in the 12 months to April, after rising 2.1% in March.

This is within the Bank’s good threshold, so this shouldn’t be the main reason to raise interest rates.

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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Friday, Stats Canada published their monthly Consumer Price Index Report, and showed that while on the surface Prices are not going up much, if you look a little closer, eating Good Food (i.e. Fresh Veggies and Fruit) continues to sky rocket (in comparison to the over all index).

There actual statement in their generic report states:

Excluding gasoline, the CPI rose 1.9% year over year in March, matching the increase in February.

Six of the 8 major categories had increases, which suggests that if you claim that CPI is running at 1.3%, there must be some components dropping significantly to reflect this low number, and (as usual) Gasoline, Natural Gas, and Fuel Oil are the big ones.

CPI For Past 5 Years

Five Year CPI Graph with and Without Gasoline

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

Main upward contributors:

  1. Purchase of passenger vehicles (+3.2%)
  2. Electricity (+7.5%)
  3. Fresh vegetables (+14.9%)
  4. Food purchased from restaurants (+2.6%)
  5. Fresh fruit (+11.3%)

Main downward contributors:

  1. Gasoline (-13.6%)
  2. Natural gas (-17.4%)
  3. Fuel oil (-25.8%)
  4. Mortgage interest cost (-1.5%)
  5. Women’s clothing (-1.8%)

As you can see nothing you can eat is getting cheaper, and note also that most power and resource types are dropping in price, however, electricity (allegedly the power of the future) is still going up in price. In Ontario the price increase is even more marked.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.1% in the 12 months to March, after rising 1.9% in February.

This suggests the Bank of Canada will not be able to blame Inflation as a reason to raise Interest Rates (for now).

Reports from the Past While.

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

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Food Prices Continue to Rise

It continues to be more expensive to eat in Canada, and worse, it is really expensive to eat healthy, which is what we found out on Friday from Stats Canada when they published their Consumer Price Index for February 2016 report. As usual the report starts with an optimistic statement:

The Consumer Price Index (CPI) rose 1.4% in the 12 months to February, after increasing 2.0% in January.

However, as we have learned the devil is in the details of the report, and those very interesting details you find in, The Consumer Price Index (62-001-X), which has a lot more interesting details. That report has a much more interesting detailed set of highlights which include:

Main upward contributors:

  1. Purchase of passenger vehicles (+5.0%)
  2. Fresh vegetables (+17.2%)
  3. Electricity (+6.3%)
  4. Fresh fruit (+14.4%)
  5. Food purchased from restaurants (+2.7%)

Main downward contributors:

  1. Gasoline (-13.1%)
  2. Natural gas (-15.3%)
  3. Women’s clothing (-2.9%)
  4. Mortgage interest cost (-1.4%)
  5. Fuel oil (-19.3%)

Fresh fruit and vegetables are always more expensive in the winter, but this is a little more than just that. The other one I keep noticing is the price of electricity keeps going up. Given it seems to be the energy of the future, I keep wondering what is driving the price up? Here in Ontario it can be attributed to bad choices by Ontario Hydro that we are all having to pay off, but is this seen everywhere else?

The other head scratcher for me is given everyone says we are in a “housing bubble” why isn’t Shelter a bigger contributor. Shelter was only up 1.2% year over year? That seems odd to me. Even odder are some of the components

  • Owned accommodated is up 1.8% (year over year), however as part of that there are lower mortgage rates.
  • Home and Mortgage insurance is up 6.5% year over year? I can attest to that one, just got my updated insurance for the year, holy cow!
  • Property tax and special charges are up 3.0%, again, no surprise for me, not that I like it.
  • Maintenance and repairs are up as well at 3.5%
  • Lower heating costs (much lower) is what is causing the ownership rate to be so low

So owning a home is getting much more expensive, not just the price of buying a house. Seems to point to the “Renting may not be a bad idea” argument.

We all know that what the Bank of Canada thinks about inflation is important.

Bank of Canada’s core index

The Bank of Canada’s core index increased 1.9% in the 12 months to February, after rising 2.0% in January.

This suggests that inflation will not be cited as a reason to raise interest rates, but that doesn’t mean the rates aren’t going to go up (soon).

CPI

CPI with and Without Gasoline for Past 5 Years

Reports from the Past While.

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

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