Originally compiled in 2012, this inflation report offers a look back at how Canadian consumer prices shifted during that time. The numbers are historical, but the patterns and drivers continue to be relevant. These drivers include rising fuel and food costs, drought effects, and stable core inflation. This information is essential for those studying long-term economic trends in Canada. The context might be archival, but the lessons still resonate today.
Apologies to my regular readers. I’m only now catching up with my friends at Stats Canada. They published their monthly Consumer Price Index for August 2012 last Friday. There is some OK news in there for Canadians. 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.
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:
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 |
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.
This keeps me thinking – where did all the stimulus go? What is wrong with this inflation targeting system?
This inflation news is very good for the economy and consumers, businesses and the business as a whole. Hopefully it remain at a decent rate until the economy can continue to recover. Interestingly enough Ontario is leading the nation through the recovery http://news.ontario.ca/opo/en/2011/07/ontario-leads-canada-through-economic-recovery.html