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CPI Down Again (kind of) August 2009

CPI Down Sort of Again

Stats Canada announced on Thursday that the Overall CPI for the year ending August 2009 effectively dropped by 0.8% (the July year to year drop was a whopping 0.9%). Why? A few reasons but the cost of Gasoline is the major component of the overall CPI that caused this drop in prices.

CPI With and Without Gasoline
CPI With and Without Gasoline

Gas Still Cheaper than Last Year at this Time

It’s hard to remember but last year at this time the price at the pump per liter for gasoline was still around $1.20 (in Ottawa at least) and now our prices are around 90 cents a liter, and this is a big dampening force for any large price increases in other parts of the CPI

Last Year Gas vs. This Year
Last Year Gas vs. This Year

Hard to remember that Gasoline is so much cheaper, but it is not too bad. Interesting to note that the graph also shows that our price right now is still higher than it was last December (so this “deflation” due to Gasoline may not continue on much longer).

Interest Rates Should Stay Lower

If you look at the Bank of Canada’s core index it is up 1.6% year over year, which is still well below the Bank of Canada’s goals for Inflation, which should mean that this will not be a reason for interest rates to creep up in the near future. Lower interest rates will allow for folks to pay down debt, or get their debt loads lower, which is a good thing (anyone seeing this as a reason to get farther into debt, please slap your left wrist with a metal ruler (like the Nuns used to)).

Big Culprit?

Given the monstrous differences in Gasoline prices, what could possibly be going up in price now? Food prices again are up over 4.0% year over year which is a bad thing for large households, as well as house and Personal Care areas were up a large amount (2.9%) as well.

My personal peeve of Alcohol and Beverages were up a whopping 3.1%, but no one dares complain about that!

 Relative importance2August 2008August 2009July 2008 to July 2009August 2008 to August 2009
    % change
Household operations, furnishings and equipment11.10104.4107.02.62.5
Clothing and footwear5.3693.792.1-2.1-1.7
Health and personal care4.73109.3112.53.72.9
Recreation, education and reading12.20103.5104.41.10.9
Alcoholic beverages and tobacco products3.07127.5131.43.13.1
All-items (1992=100) 137.6136.6-0.9-0.7
Special aggregates     
All-items excluding food and energy73.57110.5111.51.00.9
Core CPI482.71112.0113.81.81.6

Random Thoughts Return Next Week

Given how little I wrote this week, I felt putting out a “best of” posting for Friday would show just how slack a lifestyle I lead, so Random Thoughts will return next week.

Inflation in 2009

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