CPI Takes a Jump in April 2014

Our friends at Stats Canada published on Friday their Consumer Price Index Report for the year ending April 2014, and it seems like our economy is starting to heat up, with inflation running year to year at about 2.0% . Last month year over year we were only at 1.5%, so this could be either a one month “blip” or the start of full blown inflation returning to our happy economic world (haven’t seen much of it in the past 10 years or so).

Specifically they stated:

The Consumer Price Index (CPI) rose 2.0% in the 12 months to April, following a 1.5% increase in March. The rise in April was the largest since April 2012.

The old energy bugaboo has come back to visit, and given the prices of gasoline in Ottawa, I am not surprised. Specifically the terrible triad I am seeing are:

1. Automobile Gasoline prices that keep yo-yo’ing however, they never quite go down as low as they did previously.
2. Electrical costs sky-rocketing (in Ontario the good)
3. Natural Gas prices jumping 40% due to it being a “cold winter” (that is an exact quote from Enbridge).

Without energy being included inflation is running about 1.4%, so you can see the direct impact of this in the CPI, and how these price jumps work in the background of other costs (like shipping costs, and storage costs, etc.,) remains to be seen trickling through the numbers over the next few months.

 

Figure (1) is a nice graph illustrating just how energy prices can skew the data badly for CPI.

Before we jump all over Energy costs as being the sole reason we are paying more, there is another useful graphic to look at here:

Figure (2) shows that SIN is becoming more expensive as well (Booze, Tobacco) , putting a roof over our heads is costly as well, and driving to work isn’t getting cheaper either. Life is getting more expensive every day.

What Does the Bank of Canada Think?

As we know the Bank of Canada has it’s own measurement of the CPI and using the Bank of Canada Core Index yardstick prices only rose (year over year) 1.4%, which is just below the “economy working OK” window that the Bank has published, but will this mean they aren’t thinking about raising interest rates to cool things down? That only time will tell.

The Really Big Table

Figure (2) is showing us graphically what is more expensive, but this table is showing us the real numbers this is all based on.

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

Â	Relative import1	April 2013	March 2014	April 2014	Mar to Apr 2014	Apr 2013 to Apr 2014
Â	%	(2002=100)			% change
All-items Consumer Price Index (CPI)	100.002	122.7	124.8	125.2	0.3	2.0
Food	16.60	132.1	134.4	134.6	0.1	1.9
Shelter	26.26	128.2	131.4	132.4	0.8	3.3
Household operations, furnishings and equipment	12.66	114.3	115.7	115.5	-0.2	1.0
Clothing and footwear	5.82	94.7	94.0	95.0	1.1	0.3
Transportation	19.98	128.6	131.7	132.2	0.4	2.8
Health and personal care	4.93	118.6	118.1	118.9	0.7	0.3
Recreation, education and reading	10.96	105.2	106.5	106.2	-0.3	1.0
Alcoholic beverages and tobacco products	2.79	140.1	145.3	145.1	-0.1	3.6
Special aggregates
Core CPI3	84.91	121.0	122.5	122.7	0.2	1.4
All-items CPI excluding energy	91.44	119.9	121.5	121.6	0.1	1.4
Energy4	8.56	158.0	167.2	171.2	2.4	8.4
Gasoline	4.62	181.3	189.2	193.2	2.1	6.6
All-items CPI excluding food and energy	74.85	117.2	118.6	118.8	0.2	1.4
Goods	48.18	114.9	117.0	117.5	0.4	2.3
Services	51.82	130.3	132.5	132.9	0.3	2.0

1.2011 CPI basket weights at January 2013 prices, Canada, effective February 2013. 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 up to 100% as a result of rounding.

3. The Bank of Canada’s core index excludes eight of the CPI’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, consult the Bank of Canada website (www.bankofcanada.ca/rates/indicators/key-variables/inflation-control-target/).

4. The special aggregate “Energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.