Canada: Consumer Price Index, May 2017

The Consumer Price Index (CPI) rose 1.3% on a year-over-year basis in May, following a 1.6% gain in April.

Overall, energy prices rose less year over year in May than they did in April, with the year-over-year growth rate in gasoline prices slowing to half of what it was the previous month. Declines in food prices continued to moderate.

Excluding food and energy, the CPI was up 1.4% on a year-over-year basis in May, after posting a 1.5% increase in April.

12-month change in the major components

Prices were up in six of the eight major components in the 12 months to May, with the shelter and transportation indexes contributing the most to the year-over-year rise in the CPI. The clothing and footwear index and the food index declined on a year-over-year basis.

Shelter costs grew 1.9% in May on a year-over-year basis, after increasing 2.2% in April. This deceleration was led by the electricity index (-5.5%), which declined year over year for a fifth consecutive month. On a monthly basis, electricity prices were down 3.3% in May, led by declines in Ontario. On a year-over-year basis, the natural gas index rose less in May than in April. Conversely, homeowners’ replacement costs were up more in May (+4.4%) than in April (+3.9%).

The transportation index rose 2.2% over the 12-month period ending in May, compared with 4.2% in April. Gasoline prices contributed the most to this deceleration, up 6.8% on a year-over-year basis in May, after a 15.9% gain in April. The purchase of passenger vehicles index edged up 0.2% in the 12 months to May, marking its smallest year-over-year increase since February 2015. At the same time, the price of air transportation rose more in the 12-month period to May than in April.

The recreation, education and reading index rose 2.5% in the 12 months to May, following a 3.3% increase in April. The travel tours index was up 6.8% year over year in May, after a 9.4% increase in April. Prices for video equipment fell more on a year-over-year basis in May than in April. At the same time, the traveller accommodation index rose 6.3% over the 12-month period ending in May, following a 5.7% increase in April.

In May, the food index was down 0.1% on a year-over-year basis, following a 1.1% decline in April. Prices for food purchased from stores decreased 1.2% year over year in May, with the meat and bakery products indexes contributing the most to the drop. The decline in fresh fruit prices (-1.0%) slowed in May, following a 6.2% decrease in April. Prices for fresh vegetables rose year over year for the first time since August 2016. Meanwhile, prices for food purchased from restaurants posted a 2.4% increase in the 12 months to May.

12-month change in the provinces

Year over year, consumer prices rose less in May than in April in all provinces. Growth in the CPI decelerated most in Manitoba, while the smallest deceleration in the growth of prices occurred in Quebec.

The CPI in Manitoba was up 1.0% year over year in May, following a 1.6% increase in April. The gasoline index registered a 0.9% decline in the 12 months to May, following an increase of 12.5% in April. Manitoba was the only province to post a year-over-year decline in gasoline prices. Natural gas prices in the province fell 4.9% in the 12-month period ending in May, providing the largest downward contribution to the natural gas index at the national level. At the same time, passenger vehicle insurance premiums rose 3.4% over the course of the year ending in May.

Consumer prices in Ontario rose 1.4% in the 12 months to May, after a 1.9% increase in April. Electricity prices declined 16.1% year over year in May, partly reflecting decreases in the time-of-use rates. Among the provinces, the cost of women’s clothing fell the most in Ontario, declining 5.0% in the 12-month period ending in May. At the same time, the homeowners’ replacement cost index registered a 7.9% year-over-year increase in May, the largest gain among the provinces, following a 6.8% increase in April.

In Quebec, consumer prices rose 0.7% year over year in May, following a 0.8% increase in April. The Internet access services index fell 11.7% in the 12-month period ending in May, the largest decline among the provinces. In contrast, fresh vegetable prices increased more in Quebec than in any other province on a year-over-year basis in May.

On a seasonally adjusted monthly basis in May, the transportation index (-1.1%) posted the largest decline, while the clothing and footwear index (+0.6%) recorded the largest gain.

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