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.

CPI or Inflation with and without gasoline included

2017 Inflation Discussion

So far 2017 has only one discussion:

• 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:

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.

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%)

The game of numbers, known as the Consumer Price Index from Stats Canada (for August), continue to show an optimistic story on the surface, and a more interesting one underneath the sheets (CPI Canada). (Remember: Lies, Damn Lies and Arithmetic)

The following two lines from the report outline things nicely:

The Consumer Price Index (CPI) rose 1.1% on a year-over-year basis in August, following a 1.3% gain in July.

Excluding gasoline, the CPI Canada was up 1.7% year over year in August, after posting a 1.9% increase in July.

Without gasoline, numbers are still not bad, but then have a look at the data in detail, where you find out that year over year, Electricity rates are up 5.2% (across Canada). In Ontario, I am sure it is even bloody higher!

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

Main upward contributors:

1. Purchase of passenger vehicles (+5.2%)
2. Homeowners’ replacement cost (+4.0%)
3. Electricity (+5.6%)
4. Food purchased from restaurants (+2.5%)
5. Air transportation (+5.7%)

Main downward contributors:

1. Gasoline (-11.5%)
2. Natural gas (-9.9%)
3. Travel tours (-5.6%)
4. Telephone services (-1.2%)
5. Fuel oil (-11.8%)

See, if you look at the numbers close enough, you can really depress the hell out of yourself.

CPI by Category for Past 12 Months

Bank of Canada’s core index

The Bank of Canada’s core index increased 1.8% year over year in August, following a 2.1% gain in July.

The importance of this, is that while this is still within the Bank of Canada’s “comfort zone” for inflation, interest rate increases may still happen (you just can’t blame it on Inflation (directly)). Also remember, the Governor of the Bank stated, Lower-for-longer interest rates require adjustments, better read what needs to happen to keep rates low (your sphincter might tighten a little).

Bank of Canada Operational Guide for Inflation

Reports from the Past While.

If you want to have a walk down memory lane about how prices have gone up, here you go.

• Electricity Prices Continue to Sizzle in July
• Zap! Electricity Prices Pushes Inflation in June
• Expensive Food and Shelter in April in Canada
• Good Food Still Is Not Cheap in Canada (Inflation for March)
• Food Prices Continue to Rise for February
• Veggies up 18.2 pct in Canada
• Food Prices up 4.1% For 2015 in Canada
• Gas Prices Drive Down Inflation in December to 1.5%
• Lower Prices in January in Canada, Pull the Other Leg
• Expensive Food in Canada in March
• Prices up 0.8% in April or More Fun with Numbers
• Inflation at 0.9% for May (maybe)

If you glance at the report from Stats Canada you will see the usual fairly good news in terms of the Consumer Price Index for July: (except for electricity prices)

The Consumer Price Index (CPI) rose 1.3% in the 12 months to July, after increasing 1.5% in June.

This sounds heartening (having grown up in the days of inflation running at 11% or higher), but again, you have to peel the onion to get a better view of what is really happening.

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

Main upward contributors:

1. Purchase of passenger vehicles (+5.4%)
2. Homeowner’s replacement cost (+3.6%)
3. Electricity (+5.4%)
4. Food purchased from restaurants (+2.7%)
5. Air transportation (+7.1%)

Main downward contributors:

1. Gasoline (-14.0%)
2. Natural gas (-10.3%)
3. Fuel oil (-13.4%)
4. Mortgage interest cost (-0.7%)
5. Children’s clothing (-4.1%)

So this data shows that Electricity (the alleged energy of the future) keeps going up in price, and Gasoline prices continue to obfuscate the Inflation data. In Ontario electrical rates are very high and will be going up

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

As you can see from the graphic, gasoline continues to skew the data badly. The interesting other things that are lowering the index is Mortgage Interest Costs, which won’t slow down the scorching hot summer Real Estate market in many cities.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.1% in the 12 months to July, matching the rise in June.

This is still in the zone where the bank may not take Interest Rate action, but note that the Bank’s rate is significantly higher than the Stats Canada rate.

Inflation by Category for July

Reports from the Past While.

If you want to have a walk down memory lane about how prices have gone up, here you go.

• Zap! Electricity Prices Pushes Inflation in June
• Expensive Food and Shelter in April in Canada
• Good Food Still Is Not Cheap in Canada (Inflation for March)
• Food Prices Continue to Rise for February
• Veggies up 18.2 pct in Canada
• Food Prices up 4.1% For 2015 in Canada
• Gas Prices Drive Down Inflation in December to 1.5%
• Lower Prices in January in Canada, Pull the Other Leg
• Expensive Food in Canada in March
• Prices up 0.8% in April or More Fun with Numbers
• Inflation at 0.9% for May (maybe)