Become a Tangerine client today

in Inflation, Stats Canada

The good news is  that on Wednesday last week the Bank of Canada kept their key over night rate at 1.0% for now, however on Friday Stats Canada confirmed what we all already knew, inflation continues at its torrid pace in June, specifically:

The Consumer Price Index (CPI) rose 2.4% in the 12 months to June, following a 2.3% increase in May.

Remember that over 2.0% starts the Bank of Canada taking notice of Inflation. The graph for Inflation does not look very good, as you can see:

Inflation in Canada

Inflation over the past little while in Canada

Quite the spike going on, what caused this jump? A very good graph in the report shows where it is hurting the most.

Inflation in Canada

Where the Inflation Came From, by category

Note tobacco and booze is up big time, just in time for the summer.

Bank of Canada’s core index

Remember that the Bank of Canada is the worry point, in that they might raise interest rates to “cool down” inflation. I guess the good news here is that the Bank of Canada’s measures seem to say our inflation isn’t bad (yet).

The Bank of Canada’s core index rose 1.8% in the 12 months to June, after increasing 1.7% in May.

The seasonally adjusted core index rose 0.2% on a monthly basis in June, matching the increase in May.

Note this helpful graphic from the Bank of Canada and how they notice inflation.

Inflation-Control Target

Inflation-Control Target

Operational Guide

Operational Guide

The Big Table

For those who aren’t sure, let me show you where the big increases are in a big table!

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

Rel import1 June 2013 May 2014 June 2014 May to June 2014 June 2013 to June 2014
% (2002=100) % change
All-items Consumer Price Index (CPI) 100.002 123.0 125.8 125.9 0.1 2.4
Food 16.60 132.5 135.7 136.4 0.5 2.9
Shelter 26.26 128.5 132.6 132.2 -0.3 2.9
Household operations, furnishings and equipment 12.66 114.2 115.8 116.4 0.5 1.9
Clothing and footwear 5.82 91.2 94.5 92.7 -1.9 1.6
Transportation 19.98 130.2 132.7 133.1 0.3 2.2
Health and personal care 4.93 118.4 119.2 119.0 -0.2 0.5
Recreation, education and reading 10.96 106.6 107.8 108.2 0.4 1.5
Alcoholic beverages and tobacco products 2.79 140.9 146.2 146.7 0.3 4.1
Special aggregates
Core CPI3 84.91 121.0 123.3 123.2 -0.1 1.8
All-items CPI excluding energy 91.44 119.9 122.1 122.2 0.1 1.9
Energy4 8.56 162.1 172.7 173.0 0.2 6.7
Gasoline 4.62 188.5 194.8 198.7 2.0 5.4
All-items CPI excluding food and energy 74.85 117.2 119.1 119.1 0.0 1.6
Goods 48.18 114.8 117.9 117.8 -0.1 2.6
Services 51.82 131.1 133.6 133.9 0.2 2.1
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.

{ 0 comments }

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: