in Bank of Canada, Inflation, Stats Canada

As I assumed the inflation numbers for the end of the year have gone completely squirrely™ (my new term for numbers manipulated to create a false sense of security) thanks to plummeting gas prices. Given gas is almost 1/2 price compared to 2 years ago, which is nuts, but I just keep feeling this whole thing is a manipulation, but that remains to be seen.

Inflation was around 2.4% (year over year) just a short while ago, now it is at 1.5%, and there is a real chance of it dropping further, if gas prices continue to drop (although I note Diesel fuel prices are not dropping that fast, so the trucking industry or farmers are not basking in the joys of the current low gas prices).

How squirrely are these numbers?

The Consumer Price Index (CPI) rose 1.5% in the 12 months to December, following a 2.0% increase in November.

That is a 25% drop in one month for the year over year inflation numbers, pretty big, but what does it really mean?

CPI Past Little While

The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline

You can see without the gasoline, inflation continues to run above 2.0%, which is worrying, isn’t it? I bet you are asking just how much did Gas drop these past 12 months?

On a monthly basis and before seasonal adjustment, the gasoline price index fell 9.8% in December. Between June and December 2014, gasoline prices decreased 24.6%. In comparison, prices for gasoline declined 42.7% between June and December 2008.

Gas prices for past little while

Gasoline prices continue to fall in December

That is a bloody big drop. The graph shows how big a drop it was:

How does this all look in the big basket? This is the measure of the actual price over time.

Seasonally adjusted CPI

Seasonally adjusted monthly Consumer Price Index

Bank of Canada’s core index

Remember the Bank of Canada has their own way of measuring things, and they seem to not be taking gas into the equation (as much):

The Bank of Canada’s core index rose 2.2% in the 12 months to December, after increasing 2.1% in November.

Interesting that they lowered interest rates even with Inflation at 2.1%?

The Big Table

Let’s have a look at one of the big tables to see what has gone up in price

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

Relative import1 December
2013
November
2014
December
2014
Nov to Dec 2014 Dec 2013 to Dec 2014
% (2002=100) % change
All-items Consumer Price Index (CPI) 100.002 122.7 125.4 124.5 -0.7 1.5
Food 16.60 132.5 136.9 137.4 0.4 3.7
Shelter 26.26 129.9 132.8 133.0 0.2 2.4
Household operations, furnishings and equipment 12.66 114.7 118.2 117.8 -0.3 2.7
Clothing and footwear 5.82 89.4 94.7 91.1 -3.8 1.9
Transportation 19.98 128.5 127.7 124.9 -2.2 -2.8
Health and personal care 4.93 118.1 119.9 119.6 -0.3 1.3
Recreation, education and reading 10.96 105.3 106.8 106.1 -0.7 0.8
Alcoholic beverages and tobacco products 2.79 141.2 149.4 149.1 -0.2 5.6
Special aggregates
Core CPI3 84.91 121.0 124.1 123.7 -0.3 2.2
All-items CPI excluding energy 91.44 119.9 122.9 122.5 -0.3 2.2
Energy4 8.56 158.9 156.5 148.7 -5.0 -6.4
Gasoline 4.62 179.7 166.2 149.9 -9.8 -16.6
All-items CPI excluding food and energy 74.85 117.1 119.8 119.3 -0.4 1.9
Goods 48.18 113.8 116.2 114.6 -1.4 0.7
Services 51.82 131.7 134.5 134.5 0.0 2.1

1.2011 CPI basket weights at January 2013 prices, Canada, effective February 2013.

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’s website.

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

Source(s):

CANSIM tables 326-0020 and 326-0031.

{ 4 comments }

  • Barry @ Moneywehave January 26, 2015, 1:11 PM

    Funny how when gas prices go down you get disappointed if prices go up a few cents. When I filled up yesterday I was actually upset that I was paying more than 90cents a liter. Then I remembered when gas was $1.29 and I shut my mouth

    Reply
    • bigcajunman January 26, 2015, 5:17 PM

      Yes, I actually cringed seeing 90 cents a litre this morning, after gasing up at 82 cents a litre yesterday night… wait a minute, wasn’t I paying $1.40 a litre 8 months ago? 😳

      Reply
  • Bet Crooks January 26, 2015, 10:09 AM

    Diesel prices are usually higher in winter when refineries are cranking out heating oil.
    http://www.producer.com/2014/09/canadian-diesel-prices-could-spike-again/
    They might ease down in the spring but that’s a bit hard to call right now.

    Reply

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