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The Daily

Thursday, May 17, 2007
April 2007 

Consumers paid 2.2% more in April for the goods and services in the Consumer Price Index (CPI) basket than they did in April 2006, a slightly slower growth than the 2.3% increase recorded in March. However, excluding energy components, consumer prices increased at their fastest pace (+2.4%) in almost four years.

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Much of the upward pressure on the all-items index in April again came from the owned accommodation sector, while energy components exerted relatively less influence. In April, average gasoline prices were slightly lower than they were last year. Prices at the pump, although relatively high, jumped 13.5% between March and April 2006, while they increased only 2.6% over the same months this year, pushing the 12-month variation of the gasoline index in the negative territory (-0.6%).

The all-items index without energy components advanced by 2.4% in April, up from 2.1% in March. This was the strongest year-over-year rise posted by this index since May 2003.

In April, the Bank of Canada's core index was up 2.5%, compared with the same month of the previous year. The growth in this index, which is used by the Bank of Canada to monitor the inflation-control target, increased in relation to the previous month, when it was 2.3%. This was the strongest rise posted by this index since March 2003.

On a monthly basis, the all-items index increased by 0.4% between March and April. This was much slower than the 0.7% and 0.8% increases in the two previous months. Two energy components, gasoline and natural gas, accounted for most of the increase in the index in April.

Note to readers

In January, Statistics Canada announced a major update of the CPI to reflect changes in the spending patterns of Canadian households. This update, which will occur on June 19, 2007, is designed to ensure the CPI's reliability as a measure of inflation, a statistical series deflator and a tool for indexing various payments and transfers. Documentation is now available. Please see the What's new announcement in CANSIM.

The all-items index without energy components increased by 0.2% in April. The rate of increase in this index dropped for a second straight month, after rising 0.3% in March and 0.6% in February.

The core index rose by 0.2% between March and April following a 0.3% increase the previous month.

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Year-over-year: Owned accommodation costs push up all-items index

Once again in April, costs associated with owned accommodation were the primary factor behind the 2.2% rise in consumer prices across the country.

Mortgage interest cost rose by 5.6% in April, compared with the same month last year. This was the fastest 12-month growth since January 2001. This increase was mainly driven by higher prices paid by consumers for houses.

Mortgage interest cost, which measures changes in the amount of mortgage interest owed by homeowners, has posted a 12-month change above 5.0% since early 2007.

Although its contribution to the rise in the all-items index remains substantial, homeowners' replacement cost, which represents the worn-out structural portion of housing and is estimated using new housing prices (excluding land) rose 6.5% in April. This index has showed some signs of tapering off since November 2006.

Consumers paid 3.8% more for food in April compared with April last year, spending 2.3% more for restaurant meals and 12.9% more at the grocery store for fresh vegetables.

In April, motorists in Canada saw their car insurance premiums rise by 4.3% over April 2006. However, they paid less to fill up their tanks and to purchase or lease new vehicles.

The 1.1% drop in the price of vehicle purchases and leases offset the upward trend in consumer prices to some extent. Consumers were able to get vehicles that were often better equipped for prices lower than those of last year.

Compared to last year, gasoline prices were down 0.6% in April after posting increases of 10.0% and 2.9% in previous months. In April, average gasoline prices were lower than those observed in the same month last year.

In April, consumers paid 4.5% less for natural gas compared with April 2006. Benefiting most from this downturn in prices were residents of Ontario, where prices fell 12.4%, and Manitoba, where they dropped 8.3%.

Natural gas prices declined for a 10th consecutive month in April on a year-over-year basis. However, the rate of decline in this energy component dropped sharply over the past three months.

Prices for computer equipment and supplies (-18.7%) as well as video equipment (-8.4%) continued the downward trends observed in recent months.

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Above-average consumer price gains in Alberta and Saskatchewan

Although prices paid by consumers were up in all provinces, only residents of Alberta (+5.5%) and Saskatchewan (+2.4%) experienced increases higher than the national average.

In those two provinces, the strong increase in homeowners' replacement cost accounted for most of the upward pressure on consumer prices.

Manitoba posted a 12-month change in consumer prices equivalent to the national average. All other provinces, however, recorded increases of less than 2.0% between April 2006 and April 2007.

Consumers in the Atlantic provinces experienced the smallest rises. Residents of Ontario (+1.8%) and British Columbia (+1.9%) faced increases larger than those in the Atlantic provinces, but smaller than those of the Prairie provinces.

In Alberta, homeowners' replacement cost shot up by 29.1% in April, compared with the same month last year, while in Saskatchewan it climbed by 20.0%.

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In Alberta, the growth in homeowners' replacement cost has shown a steady decline since the 48.6% record level posted in September 2006. In Saskatchewan, it has been over 10.0% since December 2006. Driven by the strength of the natural resource sector, economic vitality in these two provinces has stimulated the housing sector.

Upward pressure on consumer prices for residents of Newfoundland and Labrador, Prince Edward Island and New Brunswick was caused mainly by increases in electricity rates that occurred between April 2006 and April 2007.

Month-over-month: Consumers pay more for gasoline, natural gas

Between March and April, prices for all goods and services rose an average of 0.4%. This was a pronounced slowdown in relation to the 0.8% rise recorded the previous month.

Average gasoline prices were up between March and April for a third month in a row. Although gasoline prices accounted for most of the increase in the monthly CPI, the 2.6% increase observed in April was relatively moderate, compared with the 12.5% rise posted in March.

Given that stocks have declined since February and should normally increase in this period of the year to support summer growth in demand, motorists had to spend more to fill up.

Except for Ontario, where gasoline prices were down slightly (-0.2%), all other provinces posted increases ranging from 3.0% in Nova Scotia to 7.1% in British Columbia.

For Ontario motorists, this slight decrease provided some respite after the substantial increases of the past two months.

Natural gas prices surged by 9.1% between March and April. This was the strongest rate of growth posted by this energy component since January 2001.

Monthly increases in the price of natural gas observed in Ontario (+11.8%) and Alberta (+14.3%) mainly drove the increase in the national index.

Costs of municipal water rose at their fastest pace in 15 months between March and April. Metered and flat running water rates rose 3.8%, the fastest gain since January 2006.

Water costs rose fastest in Alberta (+6.5%) and Ontario (+4.7%). Edmonton residents had to spend 17.4% more for running water in April than they did in March, while in Toronto, the increase was 10.0%.

The 2.4% increase in the price of automotive repairs and maintenance also exerted upward pressure on overall price levels.

Although it cost more to fill up the tank and to maintain a vehicle between March and April, the 0.7% drop in the price of vehicle purchases and leases offset the upward pressure on the monthly all-items index to some extent. Vehicle manufacturers continued to enhance incentives offered to new vehicle purchasers, thus bringing down prices in relation to the previous month.

Lower prices for non-alcoholic beverages (-4.7%) and women's clothing (-1.2%) also mitigated the monthly increase in prices in April.

Available on CANSIM: tables 326-0001, 326-0002, 326-0009, 326-0012 and 326-0015 to 326-0018.

Definitions, data sources and methods: survey number 2301.

More information about the concepts and use of the CPI are also available online in Your Guide to the Consumer Price Index (62-557-XIB, free) from the Publications module of our website.

Available at 7 a.m. online under The Daily module of our website.

The April 2007 issue of the Consumer Price Index, Vol. 86, no. 4 (62-001-XWB, free) is now available from the Publications module of our website. A paper copy is also available (62-001-XPB, $12/$111). A more detailed analysis of the CPI is available in this publication.

The May Consumer Price Index will be released on June 19.

For more information, or to enquire about the concepts, methods or data quality of this release, call Client Services (toll-free 1-866-230-2248; 613-951-9606; fax 613-951-1539;, Prices Division.

Tables. Table(s).