Inflation up 1.9% Hold on Bumpy Ride Ahead!

in Bank of Canada, Gasoline, Inflation, Interest Rates, Stats Canada

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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.

Inflation Graph

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 Graph

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:

Relative importance Jan-09 Dec-09 Jan-10 Dec 2009 to Jan 2010 Jan 2009 to Jan 2010
% change
All-items 100.002 113 115 115.1 0.3 1.9
Food 17.04 120.6 121.8 122.3 0.4 1.4
Shelter 26.62 123.1 121.3 121.8 0.4 -1.1
Household operations, furnishings and equipment 11.1 105.7 107.5 107.9 0.4 2.1
Clothing and footwear 5.36 91.8 90.6 90.1 -0.6 -1.9
Transportation 19.88 108.8 115.5 117.2 1.5 7.7
Health and personal care 4.73 110.4 113.2 113.8 0.5 3.1
Recreation, education and reading 12.2 99.7 102.8 101.1 -1.7 1.4
Alcoholic beverages and tobacco products 3.07 129.2 131.2 131.1 -0.1 1.5
All-items (1992=100) 134.5 136.6 137 0.3 1.9
Goods 48.78 106.2 107.6 108.4 0.7 2.1
Services 51.22 119.7 121.8 121.8 0 1.8
All-items excluding food and energy 73.57 110.3 111.7 111.6 -0.1 1.2
Energy 9.38 123.8 130.3 133.9 2.8 8.2
Core CPI 82.71 112.2 114.3 114.4 0.1 2

{ 1 comment }

  • The Rat February 19, 2010, 9:04 PM

    Interesting thread – I don’t usually see a whole lot of posts on inflationary pressure. Seems like a sizable jump.

    Reply

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