Inflation in Canada Steady at 2.1%
Stats Canada on Friday announced the monthly and yearly Consumer Price Index (aka Inflation) numbers for August, and overall you think it’s not really that bad as the CPI is running at 2.1% (12 months previous toÂ August 2013) which matches the same Â year over year number for July, but, should we be celebrating? As usual with these numbers the devil is in the details.
Even that graph starts to make you think that things are just fine, but again, you need to peel the onion to truly appreciate the horrible smell underneath (not to give onions a bad name). The first layer of the onion would tell you this:
Shelter costs rose 2.8% in August compared with the same month a year earlier. This increase followed a 3.0% gain in July. Natural gas prices increased 17.9% on a year-over-year basis in August, after rising 20.4% the previous month. Consumers also paid more for homeowners’ home and mortgage insurance.
Natural Gas prices up almost 18% year over year? Holy crap! That is how I heat my house, and heat my water, and now it costs a hell of a lot more than last year? More for Home and Mortgage Insurance, as well is no surprise, but I hope it is not a price gouge attempt (like the Natural Gas industry is enjoying).
The household operations, furnishings and equipment index rose 3.0% on a year-over-year basis in August, led by a 7.6% increase in the cost of telephone services. In addition, the cost of Internet access services rose in the 12 months to August.
Telephone costs are rising as well as Internet access prices are rising? No big surprise there given the monopolies in Canada (no mention of Cable TV costs, wonder where those line up on the list).
Bank of Canada’s core index
This is the one that the Bank of Canada looks at closely when it decides nasty things like whether interest rates should go up or not.
The Bank of Canada’s core index advancedÂ 2.1% in theÂ 12Â months to August, after increasingÂ 1.7% in July.
On a year-over-year basis, prices for some of the components included in the core index, such as telephone services and the purchase of passenger vehicles, increased more in August than in July. Movements in these indexes have a larger impact on the core index than on the All-items CPI because certain components are excluded from the core index.
At the same time, prices for gasoline, fresh fruit, fresh vegetables and natural gas, which are excluded from the core index, decelerated on a year-over-year basis in August.
That last line in bold is quite interesting, isn’t it? the Bank of Canada doesn’t count Gasoline, Fresh Fruit and vegetables or Natural Gas in their Index? Interesting.
Prices Big Table
One of my favorite of the big tables in the report is the one that goes by component (seasonally adjusted):
|June 2014||July 2014||August 2014||June to
|All-items Consumer Price Index
|Household operations, furnishings
|Clothing and footwear||93.5||93.5||93.1||0.0||-0.4|
|Health and personal care||118.8||119.1||119.2||0.3||0.1|
|Recreation, education and reading||107.5||107.5||107.8||0.0||0.3|
|Alcoholic beverages and tobacco products||146.7||147.1||148.4||0.3||0.9|
|All-items CPI excluding food and energy3||119.1||119.2||119.6||0.1||0.3|