Originally published in 2012, this snapshot of Canadian inflation offers insights into past economic patterns. While the data is historical, the dynamics behind consumer pricing continue to be relevant today. From rising food costs to shifts in energy and transportation pricing, understanding past inflation helps inform current analysis.
Inflation moderated a little in July where the year over year rate was 1.3%, blamed mostly on new cars, restaurant food, meat, and electricity (a very eclectic blend of things in our lives), Stats Canada published with their Monthly Inflation Report for July 2012.
As can be seen from the following graph, the rate of increase is moderating, but it still continues to be positive, but for now well below 2.0% ( a magic level for the Bank of Canada).
The only place we are seeing a drop in price is footwear and clothing. The one area to watch closely is pointed out by our Stats Canada friends:
Food prices rose 2.1% in the 12 months to July following a 2.0% advance in June. These two increases were the lowest year-over-year gains in food prices since the beginning of 2011. Leading the July increase were higher prices for food from restaurants (+2.4%), meat (+5.3%) and cereal products (+3.7%). In contrast, prices for fresh vegetables declined for the fifth consecutive month.
This is worrisome. Most of eastern Canada is in a Level 2 drought. This will mean higher prices for food. We are already hearing that Apple production is down. Even with the rain that is finally arriving, it may not be enough.
A slight dip in this graph is better news, but will the downward trend continue?
Bank of Canada's core index
Remember that the Bank of Canada has their own way of measuring inflation, thus this month it is higher, but still under the magical 2.0% threshold:
The Bank of Canada's core index rose 1.7% in the 12 months to July, following a 2.0% gain in June.
On a monthly basis, the seasonally adjusted core index was unchanged in July for the second consecutive month.
The Big Table
Here is one of the 3 Big tables published by Stats Canada, have a look at all of them:
Consumer Price Index and major components, Canada Not seasonally adjusted
| Relative import1 | July 2011 | June 2012 | July 2012 | June to July 2012 |
July 2011 to July 2012 |
|
|---|---|---|---|---|---|---|
| % | (2002=100) | % change | ||||
| All-items Consumer Price Index (CPI) | 100.002 | 120.0 | 121.6 | 121.5 | -0.1 | 1.3 |
| Food | 15.99 | 129.0 | 130.9 | 131.7 | 0.6 | 2.1 |
| Shelter | 27.49 | 125.9 | 127.0 | 127.2 | 0.2 | 1.0 |
| Household operations, furnishings and equipment | 11.55 | 110.7 | 113.1 | 113.0 | -0.1 | 2.1 |
| Clothing and footwear | 5.31 | 89.7 | 90.5 | 89.1 | -1.5 | -0.7 |
| Transportation | 20.60 | 125.0 | 127.6 | 126.4 | -0.9 | 1.1 |
| Health and personal care | 4.95 | 116.7 | 118.9 | 118.5 | -0.3 | 1.5 |
| Recreation, education and reading | 11.20 | 106.8 | 106.7 | 107.2 | 0.5 | 0.4 |
| Alcoholic beverages and tobacco products | 2.91 | 136.1 | 137.5 | 137.6 | 0.1 | 1.1 |
| Special aggregates | ||||||
| Core CPI3 | 82.15 | 117.3 | 119.4 | 119.3 | -0.1 | 1.7 |
| All-items CPI excluding energy | 89.92 | 117.0 | 118.8 | 118.7 | -0.1 | 1.5 |
| Energy4 | 10.08 | 157.9 | 155.7 | 156.0 | 0.2 | -1.2 |
| Gasoline | 5.80 | 182.5 | 180.2 | 180.1 | -0.1 | -1.3 |
| All-items CPI excluding food and energy | 73.93 | 114.3 | 116.2 | 115.8 | -0.3 | 1.3 |
| Goods | 47.80 | 112.9 | 113.5 | 113.2 | -0.3 | 0.3 |
| Services | 52.20 | 127.1 | 129.6 | 129.7 | 0.1 | 2.0 |
Inflation for 2012 Stories
- Inflation Below 1% to end 2012 in Canada. Food prices rose 1.5% year over year in December, after a 1.7% increase in November. Consumers paid 2.2% more for restaurant food and 4.4% more for meat. In contrast, prices declined 5.8% for fresh vegetables.
- CPI Slowing for November 2012 in Canada. Consumer prices rose 0.8% in the 12 months to November, following a 1.2% gain in October. The November increase was the smallest year-over-year gain in the Consumer Price Index (CPI) since October 2009.
- 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. Moderating energy prices helped ease CPI, while food and shelter costs rose slightly.
- Consumer prices rose 1.2% in the 12 months to September 2012, matching the increase in August 2012. Higher energy prices, particularly for gasoline and electricity, led the advance in the Consumer Price Index (CPI) for September. This was tempered by lower year-over-year price increases for the purchase of passenger vehicles and for food purchased from stores.
- 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.
- CPI Dropped in May 2012, Wow! Yes, for once the prices dropped. Gas prices were the main reason for the drop in price increases. Keep that in mind: prices were still going up, just not that fast.
- April’s CPI Child is Still Inflating (in Canada). Energy prices increased 1.1% in the 12 months to April 2012, following a 5.1% rise in March. The slower increase in April 2012 was largely due to smaller price gains in gasoline and electricity, as well as price declines in natural gas (-13.9%).
- CPI Sneaking Back up for January 2012. Food prices rose 4.2% on a year-over-year basis in January following a 4.4% increase in December. In January, consumers paid 4.9% more for food purchased from stores and 2.8% more for food purchased from restaurants compared with January 2011.
- Inflation Slows a Little to End 2011. Consumers paid 4.4% more for food in the 12 months to December, down from 4.8% 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.
Here’s hoping that this is the first sign of asset deflation. The Canadian housing bubble certainly appears to have begun imploding.
Guess I’ll hold onto my house for a while longer… then again, I bought it 15 years ago, it’s already worth much more than I paid for it (even in a depressed market).