Inflation up 1.9% Hold on Bumpy Ride Ahead!

Reader’s Note: Random Thoughts will return next week.

Also, watch for the First Big Cajun RRSP Software Giveaway! Coming real soon (once I figure out how it is going to work 🙂 ).

Gasoline Pumps Inflation

Stats Canada announced the CPI for January and it looks like Inflation is starting to become more of a factor for the Bank of Canada to think about. Year over year for January Consumer Prices were up 1.9% (remember that in December year over year it was 1.3%), so the 0.6% jump is a big one.

CPI with and without energy

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

Black Gold, Texas Tea

Yes, it is Gasoline prices that are helping fuel this inflationary jump, and this could mean follow on price increases as this price increase percolates through the system.

The increase in the all-items Consumer Price Index (CPI) was due primarily to gasoline prices. In January, gasoline prices were 23.9% higher than they were in January 2009. This follows a 25.6% rise in the 12 months to December 2009.

energy graph

Energy Graph

Gasoline prices exerted upward pressure on the CPI for the third consecutive month, as a result of price volatility in the second half of 2008 and the first half of 2009. Prices at the pump have been relatively stable since July 2009.

More importantly the Bank of Canada’s Core rate (which is what they start looking at for when they wish to increase interest rates) is now around 2.0% (year over year) up from 1.5% in December, which may cause the Bank of Canada think tank to start re-thinking when they plan on turning on the Interest Rate economy brakes, which most think is June July timeframe, but if we see another Inflationary jump next month, it may be sooner.

The Big Table of CPI

For those who love details and numbers, I present the Big Table for your perusal:

Relative importanceJan-09Dec-09Jan-10Dec 2009 to Jan 2010Jan 2009 to Jan 2010
% change
All-items100.002113115115.10.31.9
Food17.04120.6121.8122.30.41.4
Shelter26.62123.1121.3121.80.4-1.1
Household operations, furnishings and equipment11.1105.7107.5107.90.42.1
Clothing and footwear5.3691.890.690.1-0.6-1.9
Transportation19.88108.8115.5117.21.57.7
Health and personal care4.73110.4113.2113.80.53.1
Recreation, education and reading12.299.7102.8101.1-1.71.4
Alcoholic beverages and tobacco products3.07129.2131.2131.1-0.11.5
All-items (1992=100)134.5136.61370.31.9
Goods48.78106.2107.6108.40.72.1
Services51.22119.7121.8121.801.8
All-items excluding food and energy73.57110.3111.7111.6-0.11.2
Energy9.38123.8130.3133.92.88.2
Core CPI82.71112.2114.3114.40.12

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Random Thoughts with Oil Spiking

In the summertime when all the leaves and trees are green, and the gas prices double, I’ll be blue… OK, that is not how that song goes, but it looks like we are in for another summer of spiking gas prices again. Certainly can’t be blamed on demand this time, since the number of unemployed folk and folks not driving their gas inhaling SUV’s is up and down respectively, wonder what might be causing this? Maybe a secret Canadian Conspiracy to force the U.S. to rely heavily on the Tar Sands in Alberta? Not a bad concept, except this is driving the Canadian Dollar back up to equal value with the U.S. dollar, which will spike the Canadian Economic recovery if we are not careful.

What I wrote that Week

Financial Blog Highlights

This week’s treasure trove of nuggets of wisdom are a wide spectrum of financial discussions:

  • Million Dollar Journey does a comprehensive comparison in High End Chequing Comparison, a good read for those who might be shopping around for a new bank.
  • Michael James’ cynicism shows through in his post A Phone Call From Bell, but he isn’t wrong either. I’m sure if he asked the young lady to repeat “Peter Piper Picked a Peck of Pickled Peppers” five times fast, and he’d agree to the deal, she might do it.
  • The Canadian Capitalist tackles a topic near and dear to my heart in Tips on Safety Deposit Boxes. One thing he missed that you shouldn’t put in your safety deposit box, your spare dentures or eye glasses.
  • Preet’s attempt at Television fame at Where Does All My Money Go continues on with Watch Me Compete on the W Network, he is entertaining to drink with, let’s hope it translates well to TV.
  • Larry MacDonald discusses the Deflation Threat and is skeptical about hyper-inflation and deflation as well. I like reading cynics, makes me feel safer.

Don’t miss my weekend post on the one sure fire way to make some coin!

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Dollar a Litre Gas Returns for the Summer

From 2009, seems very much like today, does it not?

Just in time for your vacation, Gasoline at $1 per litre is coming to a gas station near you.  What is causing this return to last summer’s prices? No real reason, no huge jump in demand, or huge drop in supply, simply prices wandering their way back up.  If anyone can explain to me why this price increase is happening, I’d be glad to hear it, but for now it seems like Gas companies are looking to fortify their incomes for the summer.

Surely Oil prices must be going up?

Certainly don’t see anything in that graph that suggests why prices are creeping up, guess the price of Oil doesn’t have much reflection on the price of Gasoline.

Luckily gas prices don’t affect any other prices, like food or the like.

Retirement = Pension + Part Time Job?

The government announced new CPP rules starting in 2012, where if you “retire” early at 60 you won’t have to quit your job to get your CPP payments, which is interesting. The change also comes with a catch, where normally at 60 your CPP benefits are reduced by about 30% (from what you would receive at 65), however under the new plan this reduction will now be 36% drop, so there is a catch.

This is in reaction to the number of Canadians who do NOT have a pension (other than the CPP), so a step in the right direction, but is it enough?

Oh, and the deficit for this year’s budget is going to be MUCH bigger, in case you were curious too (Yikes).

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Gas Prices

Years ago we complained about gas prices at 84 cents a litre, and soon gas will be 100% more. My how things change.

What costs 84 cents in Ottawa 68 km away costs 64 cents a liter and 140 km away costs 76 cents a liters?

  1. Milk
  2. Beer
  3. Gasoline

Given the postings title, the correct answer is of course Gasoline. Yesterday I did a quick run to Cornwall, and my wife told me to wait until I got to Cornwall before I filled up because gas prices were cheaper there.

Gas was indeed 6 cents a liter cheaper in Cornwall, so I filled up there, however as I drove back to Ottawa the Esso at the bottom of the 416 just before you head towards the bridge across to the U.S. had their gas at 64 cents (maybe 66 cents) a liter! Holy cow! That is an astounding bit of price variance for a 140 km radius that is for sure.

Reasons for this odd price variance?

  1. Price gouging by large oil companies?
  2. The free market in full operation?
  3. Price fixing?

I have no idea it is (2) for sure because the free market is allowing this to happen although I’d be curious to hear my readers’ opinions on how much they think it is (1) and/or (3) as well.

What other commodity or item can have this much variance in such a small area (aside from “sales” and such)?

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Internet Shopping Up Credit Charges too!

More Canadians Buying on Internet

In Canada we enjoy our Internet shopping to the tune of $12.8 Billion and 61% more purchases for products and services than in 2005 according to Stats Canada. An interesting statistic is that the average price for each transaction was $183.00 which seems astronomical to me, but since delivery is usually a major cost in Internet purchases (unless you are buying a product or service that can be downloaded), I suppose this isn’t as strange as I think it is?

I spend a fair amount on the Internet for services and software, and I do buy the occasional “do-dad” on E-bay but I don’t think I have spent $183 on any purchase in the last little while, maybe I need to buy a fur coat to help compensate for this lack of spending?

Oil Companies Care About Environment?

Another article from Stats Canada had me a bit confused as well, evidently the industry that spends the most on Environmental Protection is the Oil/Natural Gas business? The stat that had me floored was:

In 2006, $4 of every $100 invested by oil and gas extraction went to environmental protection

So 4 cents out of every dollar spent goes to environment protection? Wow, that must mean they must be making one heck of a mess? I really don’t know what to make of that number but it is very interesting that is for sure.

Live Now, Pay More Later

With the credit crunch it seems consumer credit companies are squeezing their clients even more, and will increase their late fee penalties, in response to the alleged credit crunch. Does this mean that some of the store credit cards that were already charging close to 50% usury fees on their credit vehicles are heading even higher? Goodness, maybe Loan Sharks will get back into business, and create competition? (someone please tell me what the correct font is for sarcasm). I really wonder what the rates will be for the Usury Pay Day Loan Businesses?

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