Canada: Consumer Price Index, August 2017

The Consumer Price Index (CPI) rose 1.4% on a year-over-year basis in August, following a 1.2% gain in July.

12-month change in the major components

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

Transportation costs rose 2.8% on a year-over-year basis in August, following a 1.9% increase the previous month. As in July, gasoline prices contributed the most to the gain in transportation prices and to their acceleration. The gasoline index rose 8.6% in the 12 months to August, following a 4.6% increase in July. Air transportation costs grew at a greater rate on a year-over-year basis in August than in July. In contrast, the rail, highway bus and other inter-city transportation index rose less on a year-over-year basis in August.

The shelter index increased 1.3% year over year in August, matching the gain in July. Homeowners’ replacement costs contributed the most to the increase in prices, rising 4.2% in the 12 months to August. Prices for natural gas (+8.6%) increased at a slower year-over-year rate in August than in July. The electricity index was down 8.9% year over year in August, partly reflecting provincially legislated price reductions in Ontario earlier in 2017.

Consumer prices for food rose 0.9% on a year-over-year basis in August, after increasing 0.6% in July. Prices for food purchased from stores grew 0.3% year over year in August, following a 0.1% decline in July. Meat (+1.1%) and fresh fruit (+5.6%) prices grew at greater rates in August than in July. Prices for food purchased from restaurants rose 2.6% in August, matching the year-over-year gain in July.

In August, the household operations, furnishings and equipment index (-0.2%) was down on a year-over-year basis for the second consecutive month. The furniture index contributed the most to this decline, down 2.7% in the 12 months to August. Prices for household appliances declined 3.0% year over year in August, following a 2.0% decrease in July. Meanwhile, the tools and other household equipment index (+0.9%) rose less on a year-over-year basis in August than in July.

12-month change in the provinces

Consumer prices rose more on a year-over-year basis in nine provinces in August than in July, while the CPI in Manitoba registered the same increase as the previous month.

Saskatchewan posted the largest acceleration in consumer prices among the provinces, partly attributable to further changes in the province’s Provincial Sales Tax (PST), effective in August.

In Saskatchewan, the CPI increased 1.7% on a year-over-year basis in August, after rising 0.8% in July. This acceleration was partly attributable to the application of PST to insurance services in Saskatchewan that became effective in August. Month-over-month increases were recorded in the passenger vehicle insurance premiums index (+5.9%), homeowners’ home and mortgage insurance index (+6.3%), insurance, licences and other services for recreational vehicles index (+3.2%), and tenants’ insurance premiums index (+6.3%). Year over year, prices for food purchased from restaurants rose 8.7%, largely attributable to PST changes from the spring. Homeowners’ replacement costs fell 0.7% in the 12-month period ending in August, while they rose 4.2% at the national level.

Consumer prices in Prince Edward Island rose 2.3% year over year in August, after increasing 1.8% in July. The large growth rate in consumer prices, relative to the other provinces, remains partly attributable to an increase in the Harmonized Sales Tax (HST) in Prince Edward Island that took effect in October 2016. The traveller accommodation index also contributed to the 12-month increase in the CPI, rising 23.0% on a year-over-year basis in August, following a 19.1% increase in July. Prices for fresh fruit fell 9.3% in the 12-month period ending in August, while they rose 5.6% at the national level.

The CPI in Manitoba increased 0.9% year-over-year in August, matching the gain in July. Consumers paid 12.8% more for fresh vegetables in the 12 months to August. At the same time, the natural gas index declined more in Manitoba than in any other province.

Seasonally adjusted monthly Consumer Price Index

On a seasonally adjusted monthly basis, the CPI increased 0.2% in August, matching the gain in July.

In August, five major components increased on a seasonally adjusted monthly basis, while three decreased.

On a seasonally adjusted monthly basis in August, the transportation index (+0.8%) posted the largest gain, while the recreation, education and reading index (-0.2%) posted the largest decline.

StatsCanada

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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