Inflation on the Rise in September in Canada (2011)

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

The Consumer Price Index continues its merry dance upwards, making the Bank of Canada’s life a little more interesting every month. On Friday our Amigos at Stats Canada published the Consumer Price Index Numbers for September 2011, and they showed more upward trending in the Index.

What were the major culprits causing the 3.2% rate increase (year over year) this past month (as opposed to the 3.1% increase last month)? You have three guesses and the first two don’t count:

Energy prices advanced 12.5% during the 12 months to September, following a 13.4% increase in August. On a year-over-year basis, gasoline prices rose 22.7%, after gaining 22.8% in August. Prices for fuel oil rose 27.4% while prices for natural gas fell 4.7%.

Qu’elle surprise energy leads the way again, I would never have guessed.

Follow the Bouncing Graph

This is starting to make things very interesting in Canada in terms of when the interest rates will start to increase. More interestingly people actually say things like:

Excluding food and energy, the Consumer Price Index (CPI) increased 1.9% in the 12 months to September, following a 1.5% advance the month before. Larger year-over-year price increases in September were observed for the purchase of passenger vehicles, clothing and passenger vehicle insurance premiums.

Why would you take energy and food out of the discussion? Those are really the two major ones that you really can’t ignore? Good to see CPI is running under 2% without these two dastardly index members, but the number is a little synthetic.

Bank of Canada’s core index

The Bank of Canada’s core index advanced 2.2% in the 12 months to September, the largest year-over-year gain since December 2008. The increase follows a 1.9% rise in August. Larger year-over-year price increases in September were observed for the purchase of passenger vehicles, clothing and passenger vehicle insurance premiums.

This means the numbers are around what the B of C wants, but still getting on the high side of things. Will this cause an interest rate increase, maybe not yet, but it is going to be hard to ignore these numbers if they continue on.

The Big Table

Want to know how each area added to the index? Don’t worry, Stats Canada has all kinds of tables to look at:

Consumer Price Index and major components, Canada – Not seasonally adjusted

Relative importance¹Sept 2010August 2011Sept 2011August
to Sept 2011
Sept 2010
to Sept 2011
%(2002=100)% change
All-items Consumer Price Index (CPI)100.00²116.9120.3120.60.23.2
Food15.99122.9128.9128.2-0.54.3
Shelter27.49123.9126.2125.7-0.41.5
Household operations, furnishings and equipment11.55109.4111.2111.60.42.0
Clothing and footwear5.3192.890.695.04.92.4
Transportation20.60117.1125.3126.30.87.9
Health and personal care4.95116.1117.5117.50.01.2
Recreation, education and reading11.20105.6106.4106.90.51.2
Alcoholic beverages and tobacco products2.91134.4136.1135.9-0.11.1
Special aggregates
Core CPI³82.15115.8117.8118.40.52.2
All-items CPI excluding energy89.92115.1117.2117.80.52.3
Energy10.08138.7157.9156.0-1.212.5
Gasoline5.80147.0181.0180.4-0.322.7
All-items CPI excluding food and energy73.93113.4114.7115.50.71.9
Goods47.80109.2113.2113.50.33.9
Services52.20124.5127.3127.80.42.7
1. 2009 CPI basket weights at April 2011 prices, Canada, effective May 2011. Detailed weights are available under the Documentation section of survey 2301 (www.statcan.gc.ca/imdb-bmdi/index-eng.htm).
2. Figures may not add to 100% as a result of rounding.
3. The Bank of Canada’s core index excludes eight of the Consumer Price Index‘s most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies) as well as the effects of changes in indirect taxes on the remaining components. For additional information on core CPI, consult the Bank of Canada website (www.bankofcanada.ca/rates/price-indexes/cpi).

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