Originally published in June 2012, this post takes a detailed look at inflation trends in Canada at the time. The numbers may be over a decade old. However, the economic themes—rising electricity costs, shifting energy prices, and looming interest rate speculation—are still very relevant today. This snapshot offers a useful reference point for understanding how core inflation metrics shape Canadian economic policy.
On Friday, our friends at Stats Canada published the CPI numbers for June 2012. The rates are up a bit more than in May. However, they are still not horrendous.
Surprisingly gasoline was not a direct contributor this time, but electricity did:
Consumer prices rose 1.5% in the 12 months to June, following a 1.2% gain in May. The increase in the Consumer Price Index (CPI) was led by higher prices for the purchase of passenger vehicles and, to a lesser extent, for electricity.
It is interesting that electricity, allegedly the fuel of the future, is now facing issues. These issues are similar to those gasoline is experiencing.
The cost of electricity rose 5.9% year over year in June, mostly as a result of increases in Ontario, Alberta and British Columbia.
Higher electricity charges? Wonder what happens when the next generation of plug-in electric cars arrive, will folks want to plug them in? There needs to be some kind threshold which electricity cannot cross for electric cars to be a viable option.
The Energy Index as a whole is a bit of a roller coaster as you can see:
If you look at the seasonally adjusted value, CPI is actually dropping (it dropped 0.3% last month and 0.2% this month), but that really means nothing in my mind, CPI is raw numbers, let’s not wallow about with adjustments!
Bank of Canada Index
The Bank of Canada’s version of the data is again, interesting:
The Bank of Canada’s core index rose 2.0% in the 12 months to June, following a 1.8% gain in May. Price increases for the purchase of passenger vehicles and electricity were main contributors to the year-over-year increase in the core index.
On a monthly basis, the seasonally adjusted core index rose 0.1% in June, after declining 0.1% in May.
So this is actually getting closer to when the Bank might act?
The Big Table
What about all of the data from Stats Canada, you might ask?
Consumer Price Index and major components, Canada Not seasonally adjusted
| Relative import1 | June 2011 | May 2012 | June 2012 | May to June 2012 | June 2011 to June 2012 |
|
|---|---|---|---|---|---|---|
| % | (2002=100) | % change | ||||
| All-items Consumer Price Index (CPI) | 100.002 | 119.8 | 122.1 | 121.6 | -0.4 | 1.5 |
| Food | 15.99 | 128.3 | 130.9 | 130.9 | 0.0 | 2.0 |
| Shelter | 27.49 | 125.4 | 126.7 | 127.0 | 0.2 | 1.3 |
| Household operations, furnishings and equipment | 11.55 | 110.7 | 112.8 | 113.1 | 0.3 | 2.2 |
| Clothing and footwear | 5.31 | 90.4 | 93.4 | 90.5 | -3.1 | 0.1 |
| Transportation | 20.60 | 125.5 | 129.9 | 127.6 | -1.8 | 1.7 |
| Health and personal care | 4.95 | 116.9 | 118.8 | 118.9 | 0.1 | 1.7 |
| Recreation, education and reading | 11.20 | 106.0 | 106.7 | 106.7 | 0.0 | 0.7 |
| Alcoholic beverages and tobacco products | 2.91 | 135.6 | 137.7 | 137.5 | -0.1 | 1.4 |
| Special aggregates | ||||||
| Core CPI3 | 82.15 | 117.1 | 119.9 | 119.4 | -0.4 | 2.0 |
| All-items CPI excluding energy | 89.92 | 116.8 | 119.3 | 118.8 | -0.4 | 1.7 |
| Energy4 | 10.08 | 157.0 | 157.7 | 155.7 | -1.3 | -0.8 |
| Gasoline | 5.80 | 183.5 | 186.1 | 180.2 | -3.2 | -1.8 |
| All-items CPI excluding food and energy | 73.93 | 114.3 | 116.7 | 116.2 | -0.4 | 1.7 |
| Goods | 47.80 | 112.8 | 114.7 | 113.5 | -1.0 | 0.6 |
| Services | 52.20 | 126.8 | 129.5 | 129.6 | 0.1 | 2.2 |
Inflation for 2012 Stories
- Canada Inflation Steady at 1.2% in October 2012: CPI and Core Index Breakdown . Canada’s inflation stayed steady at 1.2% in October 2012. Energy price moderation helped ease the CPI while food and shelter costs rose slightly.
- Inflation Remains Steady for October 2012 in Canada . October 2012 inflation numbers: CPI remains at 1.2%. Is this good for consumers and the economy? Understand the impact of inflation on prices and the overall economy.
- Slowing Inflation some More for August 2012 in Canada. Canada's inflation slowed to 1.2% in August 2012, with modest price increases for gas, food, and shelter. Core inflation held at 1.6%, offering relief to consumers.
- Inflation Lower in July in Canada 2012 . Canada’s inflation in July 2012 dropped to 1.3%, driven by lower gas and clothing prices, while food costs continued to rise. A look back at what drove CPI shifts.
- CPI Rate Up a Little for June 2012 in Canada. Canada’s CPI rose 1.5% in June 2012, driven by higher vehicle and electricity prices. Core inflation reached 2.0%, nearing the Bank of Canada’s rate hike threshold.
