Inflation Slows a Little to End 2012

in Bank of Canada, Inflation, Stats Canada

Year over year 2012’s Consumer Price Index ended at 2.3% according to our friends at Stats Canada. The drop from last month’s 2.9% is being attributed to gas prices moderating (i.e. not increasing as fast, and in some instances almost dropping a smidge), and car prices dropping a little.

This is not to say that Gas prices are really dropping, but that the increase compared to last year at this time doesn’t seem quite as bad. The actual rise of gas prices year over year was about 7.6% as compared to last month where the year over year where gas was effectively up 13.5%, so it looks like the gas price increase is declining (but not the price really).

Other words from Stat Canada:

Consumers paid 4.4% more for food in the 12 months to December, following a 4.8% increase the month before. The year-over-year change for food purchased from stores eased in December to a 5.0% gain from 5.7% in November.

Bouncy, bouncy graph

Even though the CPI is moderating the bad news is that prices are up in every major category on the Index. Everything ends up costing more year over year, is never a good thing to read.

Since 2002, you can see how inflation has chewed away the actual value of a Canadian Dollar, and this period has been low, what happens if inflation suddenly heats up?

Bank of Canada’ Core Index

What the Bank of Canada thinks the inflation rate runs at is even more important, because they are the only one who has a brake for the economy (i.e. Money supply rules and Interest Rates), and luckily they think it is actually a little lower than their target which is around 2.0%, using their index. This means interest rates won’t jump due to inflation for this month.

The Bank of Canada’s core index rose 1.9% in the 12 months to December, after increasing 2.1% in November. Increases were recorded for food purchased from restaurants and passenger vehicle insurance premiums, while prices for the purchase of passenger vehicles declined.

The seasonally adjusted monthly core index posted no change in December.

The BIG Table

Where were the biggest jumps in the CPI? Always check out the Stats Canada web pages for more details, but I always love publishing one of their BIG tables too.

Table 1 Consumer Price Index and major components, Canada – Not seasonally adjusted

Relative importance¹ Dec 2010 Nov 2011 Dec 2011 Nov to Dec 2011 Dec 2010 to Dec 2011
% (2002=100) % change
All-items Consumer Price Index (CPI) 100.00² 117.5 120.9 120.2 -0.6 2.3
Food 15.99 123.9 129.2 129.3 0.1 4.4
Shelter 27.49 124.6 126.3 126.8 0.4 1.8
Household operations, furnishings and equipment 11.55 109.3 112.1 111.8 -0.3 2.3
Clothing and footwear 5.31 88.8 93.1 89.1 -4.3 0.3
Transportation 20.60 121.2 127.6 125.2 -1.9 3.3
Health and personal care 4.95 115.8 117.9 118.1 0.2 2.0
Recreation, education and reading 11.20 103.9 104.8 104.1 -0.7 0.2
Alcoholic beverages and tobacco products 2.91 134.6 135.8 135.8 0.0 0.9
Special aggregates
Core CPI³ 82.15 116.0 118.8 118.2 -0.5 1.9
All-items CPI excluding energy 89.92 115.4 118.2 117.5 -0.6 1.8
Energy4 10.08 144.0 154.1 152.7 -0.9 6.0
Gasoline 5.80 158.0 175.2 170.0 -3.0 7.6
All-items CPI excluding food and energy 73.93 113.5 115.7 115.0 -0.6 1.3
Goods 47.80 110.0 113.8 112.6 -1.1 2.4
Services 52.20 124.9 127.8 127.7 -0.1 2.2
1. 2009 CPI basket weights at April 2011 prices, Canada, effective May 2011. Detailed weights are available under the Documentation section of survey 2301 (
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 the core CPI, please consult the Bank of Canada website (
4. The special aggregate “Energy” includes electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.


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