Canada: Consumer Price Index, October 2016

The Consumer Price Index (CPI) rose 1.5% on a year-over-year basis in October, following a 1.3% gain in September.

Excluding gasoline, the CPI was up 1.4% year over year in October, after posting a 1.5% increase in September.

12-month change in the major components

Prices were up in six of the eight major components in the 12 months to October, with the transportation and shelter indexes contributing the most to the year-over-year rise in the CPI. This increase in the CPI was moderated by a decline in the food index.

The transportation index rose 3.0% in the 12 months to October, following a 2.3% gain in September. This acceleration was mainly attributable to gasoline prices, which posted a 2.5% year-over-year increase in October, after declining 3.2% in September. The purchase of passenger vehicles index rose less year over year in October (+4.4%) than in September (+5.8%), but remained the top upward contributor to the 12-month change in the transportation index.

The shelter index posted its largest increase since January 2015, rising 1.9% in the 12 months to October, after a 1.7% gain in September. The homeowners’ replacement cost index was up 4.1% on a year-over-year basis in October, following a 3.9% increase the previous month. Property taxes rose 2.8% in the 12 months to October. At the same time, the natural gas index was down 3.4% on a year-over-year basis in October, after declining 11.1% in September.

Food prices posted their first decline since January 2000, down 0.7% year over year in October after rising 0.1% in September. Prices for food purchased from stores recorded their largest decline since July 1992, down 2.1% in the 12 months to October, after decreasing 0.9% the previous month.

Prices of fresh fruit (-7.4%), meat (-1.7%), dairy products (-2.4%) and fresh vegetables (-3.6%) declined in the 12 months to October. While prices for fish, seafood and other marine products rose year over year in October, the increase was smaller than the one recorded in September. The sugar and confectionary index (+3.1%) was one of the largest upward contributors to the 12-month change in consumer prices of food purchased in stores.

Prices for food purchased from restaurants were up 2.6% in the 12 months to October, following a 2.5% rise in September.

12-month change in the provinces

Consumer prices rose more in four provinces on a year-over-year basis in October than in September. At the same time, four provinces reported a deceleration in consumer price growth. In Quebec and Alberta, the CPI’s year-over-year gain in October matched that of September.

In Prince Edward Island, an increase in the provincial component of the harmonized sales tax (HST), effective October 1, 2016, contributed to an acceleration in consumer price growth in the province. On a year-over-year basis, the CPI rose 1.9% in October following a 0.9% gain in September. Among the CPI components, gasoline prices led the acceleration, up 4.7% year over year in October, after declining 3.0% in September. In contrast, the 12-month change in the fuel oil index was down 5.8% in October, after decreasing 1.0% in September.

In Ontario, the CPI was up 2.1% in the 12 months to October, after rising 1.8% in September. This acceleration partly reflected an increase in passenger vehicle insurance premiums, up 0.8% year over year in October, after decreasing 1.3% in September. In addition, the fresh vegetables index declined 1.5% in the 12 months to October, after decreasing 2.7% in September. The traveller accommodation index posted a 2.1% increase on a year-over-year basis in October, after rising 7.7% in September.

Saskatchewan’s CPI increased 0.8% year over year in October, following a 1.1% gain in September. This deceleration was led by the purchase of passenger vehicles index, which increased 4.1% year over year in October, after rising 6.4% in September. Additionally, and contrary to the movement at the national level, gasoline prices were down more on a year-over-year basis in October than in September.

Seasonally adjusted monthly Consumer Price Index increases
On a seasonally adjusted monthly basis, the CPI increased 0.2% in October, matching the gain in September.

In October, five major components increased on a seasonally adjusted monthly basis while two declined. The recreation, education and reading index was unchanged.

On a seasonally adjusted monthly basis in October, the transportation index (+1.1%) recorded the largest gain, while the clothing and footwear index (-0.2%) posted the largest decline.

Bank of Canada’s core index

The Bank of Canada’s core index increased 1.7% year over year in October, after rising 1.8% in September.

On a seasonally adjusted monthly basis, the core index posted no change in October, after rising 0.1% in September.

StatsCanada

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell