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Inflation Slowing some More for August 2012 in Canada

in Bank of Canada, Inflation, Stats Canada

Apologies to my regular readers, only now  catching up with my friends at Stats Canada who last Friday published their monthly Consumer Price Index for August 2012, and some OK news in there for Canadians, in that Inflation continues to grow at a slowish rate.

To be exact our friends said:

Consumer prices rose 1.2% in the 12 months to August, following a 1.3% gain in July. Higher prices for the purchase of passenger vehicles, gasoline, meat and food purchased from restaurants were major factors in the year-over-year increase of the August Consumer Price Index (CPI).

Given the ups and downs of Gas prices that I have seen, inflation running this low is good news. With the drought in Eastern Canada, watch for food prices to go up, with many farmers claiming whole crop failures thanks to lack of rain and weather issues.

Inflation for the Past Little While

Are we really on a downward run here on inflation? I think the Bank of Canada hopes not, because if they introduce tighter money policy, what might happen then? Interesting question.

What is energy doing, you ask? Up and down in lots of spots, but effectively nothing? That is what seems to be happening if you look at this graph of the Energy Index:

Energy Index for the Past Little While

How is it that it says almost zero yet gas prices are up? Oh yes, my Natural Gas bill is down, fancy that?

Bank of Canada’s core index

More importantly given our friends at the Bank of Canada measure inflation a little differently, what do they think of our inflation?


The Bank of Canada’s core index rose 1.6% in the 12 months to August, following a 1.7% gain in July.

On a monthly basis, the seasonally adjusted core index rose 0.3% in August after posting no change in June and July.

Well that is bloody low too, isn’t it?

The Big Table

OK, where are we seeing the biggest growth then? The only way you are figuring that out is if you have a look at one of the big tables from Stats Canada:

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

  Relative importance1 August 2011 July 2012 August 2012 July to August 2012 August 2011 to August 2012
  % (2002=100) % change
All-items Consumer Price Index (CPI) 100.002 120.3 121.5 121.8 0.2 1.2
Food 15.99 128.9 131.7 131.7 0.0 2.2
Shelter 27.49 126.2 127.2 127.4 0.2 1.0
Household operations, furnishings and equipment 11.55 111.2 113.0 112.7 -0.3 1.3
Clothing and footwear 5.31 90.6 89.1 89.5 0.4 -1.2
Transportation 20.60 125.3 126.4 127.5 0.9 1.8
Health and personal care 4.95 117.5 118.5 119.8 1.1 2.0
Recreation, education and reading 11.20 106.4 107.2 107.6 0.4 1.1
Alcoholic beverages and tobacco products 2.91 136.1 137.6 137.8 0.1 1.2
Special aggregates            
Core CPI3 82.15 117.8 119.3 119.7 0.3 1.6
All-items CPI excluding energy 89.92 117.2 118.7 118.8 0.1 1.4
Energy4 10.08 157.9 156.0 159.2 2.1 0.8
Gasoline 5.80 181.0 180.1 184.9 2.7 2.2
All-items CPI excluding food and energy 73.93 114.7 115.8 116.0 0.2 1.1
Goods 47.80 113.2 113.2 114.0 0.7 0.7
Services 52.20 127.3 129.7 129.6 -0.1 1.8
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/2301-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 the core CPI, please consult the Bank of Canada website (www.bankofcanada.ca/rates/price-indexes/cpi).
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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