Inflation at 2011 Levels ?

We found out that Inflation is now at 2011 Levels, at 3.0% on a year-over-year basis. So what? Remember the Bank of Canada’s ideal rate is 2.0%, so this will most likely reinforce another Bank of Canada rate increase (in October). Now the B of C’s calculated Inflation is only 2.0% , but I don’t think they can ignore this kind of jump.

I haven’t commented on inflation for a while, but this report is important, for a lot of reasons. With the tariff wars that are going on, inflation is going to continue to rise (IMHO), and that will mean higher interest rates. Maybe someone will find sense and stop this Testosterone Laced bullsh*t trade war, but I doubt it.

Note also that Interest rates going up, contribute to Inflation (see the table below). Interesting spiralling effect. Stats Canada used to put out a more detailed report, but they have discontinued that report.

Biggest Inflation Contributors Over Past Year

July 2017 to July 2018
% change
Main contributors to the 12-month change
Main upward contributors
Gasoline 25.4
Air transportation 28.2
Food purchased from restaurants 4.4
Mortgage interest cost 5.2
Purchase of passenger vehicles 2.0
Main downward contributors
Telephone services -5.1
Traveller accommodation -4.1
Natural gas -5.7
Digital computing equipment and devices -3.5
Prescribed medicines -2.8

Consumer Price Index Increases by Category

CPI by Category

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Inflation Still Under 2 Pct (for now)

The Consumer Price Index for the period ending September 2017 is 1.6% (year over year). The Bank of Canada’s goal is to keep the inflation rate under 2.0%. The Bank’s own measurements have inflation running at either 1.5%, or 1.8% depending on which definition you choose. Both are below 2.0% as well.

Let’s slice the onion and see where the CPI upswing came from.  The Year over year the high/lowlights are:

Main upward contributors:

  • Gasoline (+14.1%)
  • Homeowners’ replacement cost (+4.0%)
  • Food purchased from restaurants (+2.7%)
  • Travel tours (+7.3%)
  • Air transportation (+6.4%)

Main downward contributors:

  • Electricity (-8.6%)
  • Women’s clothing (-4.6%)
  • Telephone services (-3.1%)
  • Furniture (-3.3%)
  • Men’s clothing (-2.7%)

Given Gasoline is fluctuating again, what does the CPI look like without it? Have a look:
CPI With and Without Gasoline
Homeowners’ replacement cost is another add-on to home ownership to keep in mind as well. The drop in Electricity was expected with Ontario’s rebate program, but what will happen when the program ends? It is a rebate, not a price cut.

By overall category is also quite interesting:
Inflation by category for September 2017

2017 Inflation Discussion

Reports on inflation in 2017 so far.


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Low Inflation Means No More Interest Hikes ?

It would be imprudent to assume that low inflation, will mean no more interest hikes. The Bank of Canada has wanted to lower interest rate stimulation, and they will continue with this policy. They may slow down their rate plan but rates are going up.

Stats Canada on Friday published the monthly inflation report. The report overall shows that inflation is running at 1.0%, but as usual those numbers are deceiving. The detailed report shows a better view on things.

Main upward contributors:

  • Homeowners’ replacement cost (+4.1%)
  • Food purchased from restaurants (+2.5%)
  • Travel tours (+7.0%)
  • Traveller accommodation (+7.1%)
  • Natural gas (+10.0%)

Main downward contributors:

  • Electricity (-5.3%)
  • Gasoline (-1.4%)
  • Women’s clothing (-2.5%)
  • Men’s clothing (-2.9%)
  • Household appliances (-3.3%)

I am glad to see groceries specific are not mentioned here, but food purchased from restaurants took a bump. The generic graphic gives you a better overall view though.

Inflation by Category

Inflation by Category for June 2017

B of C Final Words on the Economy

The Bank of Canada has the following view on the Canadian Economy.


Growth in the Canadian economy is projected to reach 2.8 per cent this year before slowing to 2.0 per cent next year and 1.6 per cent in 2019.

That seems to be a very modest view on things, however, it all depends on what happens down south. Is it safe ? I have no idea.

2017 Inflation Discussion

Reports on inflation in 2017 so far.



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Gasoline Pushed Inflation to 2.1 %

The January Consumer Price Index numbers came in from Stats Canada and it seems like gasoline pushed inflation to 2.1 % year over year in January. A rate of 2.1% enters the Bank of Canada worrisome zone. Using the Bank of Canada’s measures things are not as worrisome. If you check the Bank’s site, their numbers show below 2.0% which is in their “acceptable” zone.

Highlights for January

Main contributors to the 12-month change in the CPI, Main upward contributors:

  1. Gasoline (+20.6%)
  2. Purchase of passenger vehicles (+3.8%)
  3. Homeowners’ replacement cost (+4.3%)
  4. Natural gas (+15.6%)
  5. Food purchased from restaurants (+2.3%)

Main downward contributors:

  1. Fresh vegetables (-15.5%)
  2. Fresh fruit (-10.8%)
  3. Meat (-1.7%)
  4. Bakery products (-3.2%)
  5. Cereal products (excluding baby food) (-5.3%)

Great news there in that fresh fruit and veggies are lower in price. We should all be eating a bit more healthy this month! The very bad news is Gas and Natural Gas prices sky-rocketing. Might want to turn the furnace down a little, and look at those hybrids again?

Historical Electricity Prices?

Stats Canada added a fun historical section, and this month, electricity prices.

Electricity has maintained approximately the same basket weight for the past 30 years. Since the basket update in 1986, the basket weight for electricity has ranged from 1.93% to 2.77% of the all-items CPI, and averaged 2.43%.

Given how much electricity prices have shot up in Ontario, wonder if this remains true?

Graph of the Month

CPI with and without gasoline prices is always an exciting graph to check out.

Gasoline Pushed Inflation

CPI or Inflation with and without gasoline included

2017 Inflation Discussion

So far 2017 has only one discussion:



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Energy Up 4.0 % for 2016

Stats Canada on Friday published their year-end Consumer Priced Index. These numbers show us what kind of year 2016 was. The most interesting index increase is Canadians paid 4.0% more for Energy in 2016, and Ontarians had a ludicrous price jump for the price of electricity.

Overall the CPI (or inflation) year over year growth ending in December is 1.5%, which is still below the Bank of Canada’s barometer range (starting at 2.0%). This does not mean the B of C won’t raise interest rates, just that inflation won’t be the reason sited.

The Energy index includes Gasoline, Electricity and other essentials,  and as mentioned. For Ontarians Energy was particularly noticeable as Electricity is up 11.2% year over year ending in December. Yes, that is a double digit increase, so Inflation in Ontario year over year is actually 2.0%.

Prices by Category

By Category we can see the monthly changes in this graphic:

energy up

Transportation is big , note Energy is not mentioned here

Special Aggregate Table

This does show Energy, and you can see how Energy and Gasoline prices are up big year over year.

Relative importance December
2015
December
2016
December 2015 to December 2016
% (2002=100) (2002=100) % change
Special aggregates
All-items excluding energy 92.21 125.0 126.6 1.3
Energy 7.79 143.4 149.1 4.0
Gasoline 3.84 142.7 150.6 5.5
All-items excluding food and energy 75.80 121.3 123.5 1.8
Goods 46.68 116.3 117.4 0.9
Services 53.32 136.8 139.5 2.0

Detailed Highlights

From the CPI detailed report we can get a nice set of highlights about what cost more year over year.

 

Main contributors to the 12-month change in the CPI:

Main upward contributors:

  1. Gasoline (+5.5%)
  2. Homeowners’ replacement cost (+4.3%)
  3. Purchase of passenger vehicles (+2.6%)
  4. Food purchased from restaurants (+2.3%)
  5. Electricity (+3.6%)

Main downward contributors:

  1. Food purchased from stores (-2.8%)
  2. Children’s clothing (-4.5%)
  3. Video equipment (-5.8%)
  4. Travel tours (-1.6%)
  5. Mortgage interest cost (-0.3%)

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