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Friday Stats Canada published their Consumer Price Index report for April 2016 and the trend of  a deceptively low CPI increase of 1.7% caused by lower energy and gasoline prices (without Gasoline CPI is up 2.0%). That is what you will find from the summary posted on the Stats Canada website, but as we have learned, if you dig a little deeper, you find many more interesting tidbits of information.

CPI

The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline for Past 5 Years

The detailed report goes into a little more detail and gives us the following interesting specifics.

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

Main upward contributors:

  1. Purchase of passenger vehicles (+4.6%)
  2. Electricity (+6.5%)
  3. Food purchased from restaurants (+2.7%)
  4. Fresh vegetables (+11.7%)
  5. Homeowners’ replacement cost (+2.3%)

Main downward contributors:

  1. Gasoline (-5.8%)
  2. Natural gas (-12.8%)
  3. Mortgage interest cost (-1.5%)
  4. Fuel oil (-19.3%)
  5. Passenger vehicle insurance premiums (-0.9%)

As we have been seeing for the past few months, eating fresh healthy food is still bloody expensive. On the positive side (and in contradiction to the Ontario Government’s new view on Energy), Natural Gas being cheaper should help the sale of Natural Gas clothes driers and fireplaces.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.2% in the 12 months to April, after rising 2.1% in March.

This is within the Bank’s good threshold, so this shouldn’t be the main reason to raise interest rates.

Reports from the Past While.

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

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Good Food Still Is Not Cheap in Canada (Inflation for March)

Friday, Stats Canada published their monthly Consumer Price Index Report, and showed that while on the surface Prices are not going up much, if you look a little closer, eating Good Food (i.e. Fresh Veggies and Fruit) continues to sky rocket (in comparison to the over all index).

There actual statement in their generic report states:

Excluding gasoline, the CPI rose 1.9% year over year in March, matching the increase in February.

Six of the 8 major categories had increases, which suggests that if you claim that CPI is running at 1.3%, there must be some components dropping significantly to reflect this low number, and (as usual) Gasoline, Natural Gas, and Fuel Oil are the big ones.

CPI For Past 5 Years

Five Year CPI Graph with and Without Gasoline

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

Main upward contributors:

  1. Purchase of passenger vehicles (+3.2%)
  2. Electricity (+7.5%)
  3. Fresh vegetables (+14.9%)
  4. Food purchased from restaurants (+2.6%)
  5. Fresh fruit (+11.3%)

Main downward contributors:

  1. Gasoline (-13.6%)
  2. Natural gas (-17.4%)
  3. Fuel oil (-25.8%)
  4. Mortgage interest cost (-1.5%)
  5. Women’s clothing (-1.8%)

As you can see nothing you can eat is getting cheaper, and note also that most power and resource types are dropping in price, however, electricity (allegedly the power of the future) is still going up in price. In Ontario the price increase is even more marked.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.1% in the 12 months to March, after rising 1.9% in February.

This suggests the Bank of Canada will not be able to blame Inflation as a reason to raise Interest Rates (for now).

Reports from the Past While.

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

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Food Prices Continue to Rise

It continues to be more expensive to eat in Canada, and worse, it is really expensive to eat healthy, which is what we found out on Friday from Stats Canada when they published their Consumer Price Index for February 2016 report. As usual the report starts with an optimistic statement:

The Consumer Price Index (CPI) rose 1.4% in the 12 months to February, after increasing 2.0% in January.

However, as we have learned the devil is in the details of the report, and those very interesting details you find in, The Consumer Price Index (62-001-X), which has a lot more interesting details. That report has a much more interesting detailed set of highlights which include:

Main upward contributors:

  1. Purchase of passenger vehicles (+5.0%)
  2. Fresh vegetables (+17.2%)
  3. Electricity (+6.3%)
  4. Fresh fruit (+14.4%)
  5. Food purchased from restaurants (+2.7%)

Main downward contributors:

  1. Gasoline (-13.1%)
  2. Natural gas (-15.3%)
  3. Women’s clothing (-2.9%)
  4. Mortgage interest cost (-1.4%)
  5. Fuel oil (-19.3%)

Fresh fruit and vegetables are always more expensive in the winter, but this is a little more than just that. The other one I keep noticing is the price of electricity keeps going up. Given it seems to be the energy of the future, I keep wondering what is driving the price up? Here in Ontario it can be attributed to bad choices by Ontario Hydro that we are all having to pay off, but is this seen everywhere else?

The other head scratcher for me is given everyone says we are in a “housing bubble” why isn’t Shelter a bigger contributor. Shelter was only up 1.2% year over year? That seems odd to me. Even odder are some of the components

  • Owned accommodated is up 1.8% (year over year), however as part of that there are lower mortgage rates.
  • Home and Mortgage insurance is up 6.5% year over year? I can attest to that one, just got my updated insurance for the year, holy cow!
  • Property tax and special charges are up 3.0%, again, no surprise for me, not that I like it.
  • Maintenance and repairs are up as well at 3.5%
  • Lower heating costs (much lower) is what is causing the ownership rate to be so low

So owning a home is getting much more expensive, not just the price of buying a house. Seems to point to the “Renting may not be a bad idea” argument.

We all know that what the Bank of Canada thinks about inflation is important.

Bank of Canada’s core index

The Bank of Canada’s core index increased 1.9% in the 12 months to February, after rising 2.0% in January.

This suggests that inflation will not be cited as a reason to raise interest rates, but that doesn’t mean the rates aren’t going to go up (soon).

CPI

CPI with and Without Gasoline for Past 5 Years

Reports from the Past While.

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

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Another Quarter Richer but Deeper in Debt

You could sing that title to the tune of Tennessee Ernie Ford’s 16 Tons (what do you get, another day older and deeper in debt), but Stats Canada published another interesting and information filled report that the main stream media is howling about how Canadians is going to be foreclosed (on). (report National balance sheet and financial flow accounts, fourth quarter 2015)

deeper in debt

Tennessee Ernie’s Greatest Hits
from Amazon

The report itself has a great deal of useful information about the Valuation (for lack of a better term) of Canada and Canadians, and well worth having a read.

The major line in one of the tables that is being touted as the reason that Canadians are going deeper in debt. While these numbers are quite sobering in that the percentage of Debt to Disposable income is increasing and it is currently at 168% (i.e. for every $1 of disposable income, Canadians owe $1.68), however in another part of the report you can read:

On a per capita basis, household net worth was $263,200, up 1.5% from the previous quarter.

Thus my statement that we are Richer and also deeper in debt.

Quarterly Table of Debt and Income Comparisons
   3rd Q 2014 4th Q 2014 1st Q 2015 2nd Q 2015 3rd Q 2015 4th Q  2015
% % % % % %
Household sector
Debt to disposable income† 165.07 165.23 163.87 165.14 166.61 167.60
Credit market debt to disposable income 162.75 163.00 161.61 162.96 164.46 165.44
Consumer credit and mortgage liabilities to disposable income 155.36 155.59 154.20 155.50 156.99 157.96

What the ratio tells us: This ratio compares debt to annual household disposable income. In general, the ratio suggests that the lower the ratio the greater the ability to manage debt through current income.” 

The simplistic explanation overall is that Canadian assets have been increasing in value, with the housing bubble (in many areas, not Alberta though), the recovering stock market and the recovering loony as well. Are we actually saving more? I doubt it, I do believe that we are further in debt though (so yes I am agreeing with many financial pundits who are sounding warnings from this data).

The fact that debt is increasing vs. our disposable income is a more sinister issue. Are we simply deluding ourselves that since we are saving, we can also still build up more debt?

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Unemployment Continues to Rise

Friday Stats Canada did their monthly labor force survey for February 2015, and while the employment numbers look like last month’s numbers, Unemployment continues to creep ahead.

Seasonally Adjusted Employment and Unemployment for Past 5 Years

Seasonally Adjusted Employment and Unemployment for Past 5 Years (from 71-001-X)

Even thought there were about 2300 less folks employed month over month the year over year overview is a bit more optimistic:

On a year-over-year basis, employment grew by 0.7% (+118,000), with the gains mostly coming from full-time work (+82,000 or +0.6%). At the same time, the number of hours worked increased by 1.0%.

The other good news for old guys like me is there were more men 55 and over employed (and it is sad that we are all still looking for work).

If you look through the detailed reports from Stats Canada you find out some interesting tidbits like the following:

Adjusted to US concepts, the unemployment rate in Canada was 6.2% in February versus 4.9% in the United States.

So our economy continues to struggle in comparison to our Cousins down South.

Who is looking, and who has jobs? A helpful graphic:

Jobs by different groupings

Where the jobs are, aren’t and who(m) has or has not

Previous Labour News

Here are some of the posts about jobs from the past while:

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