Our friends from Stats Canada say that our basket of goods that makes up the Consumer Price Index went up only 1.2% year over year (with the year ending March 2015), which sounds just fine, but (as we know) the devil is in the details of these numbers, isn’t it?
The numbers sound lovely, except if you throw gasoline out of the equation and then your numbers change by increasing by a full 1 % (i.e. 2.2%).
Given that gasoline had a 19.2% price drop (year over year) there must have been something else that went up a lot to keep the CPI going up the way it is. Any guesses as to what was the big nasty price increase? Booze and smokes (naturally) however, a close 2nd place is food which is up 4.2% (year over year), but looking closer, Meat is up 11%, so the meat eaters of Canada are taking it right in the wallet.
A quick glance at how “all over the place” prices are over the past 12 months:
Luckily in Ontario booze prices are going to go up with the new Beer Tax proposed as well, yea! I suppose they could impose a Sirloin tax, but let’s hope they don’t think that far out of the box.
Bank of Canada’s core index
To help out with the confusing arithmetic, we have a different index for the Bank of Canada’s view, and remember their “sweet spot” for Inflation is 2.0%, and the past two months, their index has been over that, so are interest rate increases coming some time this year? Here is what Stats Canada said:
The Bank of Canada’s core index increased 2.4% in the 12 months to March, after rising 2.1% in February.
The seasonally adjusted core index rose 0.4% on a monthly basis in March, following a 0.1% increase in February.
However, the Bank of Canada already commented in this area, on Wednesday, and their statement about keeping their key overnight rate steady was:
Risks to the outlook for inflation are now roughly balanced and risks to financial stability appear to be evolving as expected. The Bank judges that the current degree of monetary policy stimulus remains appropriate and therefore is maintaining the target for the overnight rate at 3/4 per cent.
This was after they explained that the Canadian economy was “stalled” in the first quarter of 2015, so it seems the economy continues to be addicted to stimulants.