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The Daily

Wednesday, May 21, 2008
April 2008 

Consumer prices accelerated for the first time in five months in April in the wake of higher gasoline prices and fewer incentives on passenger vehicles.

The Consumer Price Index (CPI) rose 1.7% between April 2007 and April 2008, up from the 1.4% increase in March. This was the first acceleration of the all-items index since November 2007.

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Gasoline was the main contributor to both the acceleration and the 12-month increase of the all-items index. Gasoline prices rose 11.6% between April 2007 and April 2008, compared with a 7.9% increase posted a month earlier.

The all-items index excluding gasoline increased by 1.3% during the 12-month period. A second contributing factor to the acceleration in April was less downward pressure from passenger vehicle prices. They declined in April, but at a slower pace than in the previous month.

The 12-month change in the Bank of Canada's core index, which is used to monitor the inflation control target, rose 1.5% in April, faster than the 1.3% increase in March. Less downward pressure from passenger vehicles prices contributed to this acceleration.

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On a seasonally adjusted basis, the all-items index and the core index rose 0.4% between March and April 2008. The increase in the core index was the sharpest since May 2006.

12-month change: Gasoline fuels acceleration of all-items index

The main upward pressure on the all-items index and its acceleration came from gasoline prices. Pump prices rose by 11.6% between April 2007 and April 2008, compared with a 7.9% increase over the previous period. The highest increases were posted on the Prairies.

The reduction of incentives offered by car manufacturers also contributed to the acceleration of the all-items index.

Another significant upward contributor to the increase in consumer prices in April was mortgage interest cost. Again in April, new housing prices exerted more upward pressure on this index than mortgage interest rates.

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Prices for fuel oil and other fuels surged 36.9% in April, the fastest increase since September 2005 for these products derived from crude oil. In the Atlantic provinces, this component exerted the strongest upward pressure on consumer prices.

Homeowner's replacement cost, which represents the cost of maintaining a housing structure, rose 4.6%. This was weaker growth than increases posted in February and March.

Prices for bakery products surged 10.4% between April 2007 and April 2008, the steepest rise since November 1981. In spite of this increase, prices for food purchased from stores went up by 0.9% in April, a slower pace than the all-items index.

Prices for fresh vegetables continued to fall in April. Fresh vegetable prices were relatively higher at this period last year when supplies were hit by a frost in California. The appreciation of the Canadian dollar may have also helped lower prices of imported vegetables.

The decline in passenger vehicle prices mitigated, to some extent, the increase in the all-items index. The price of passenger vehicles fell 6.6% in April 2008 compared with the same month of the previous year, a less substantial drop than the 7.1% decline in March.

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Women's clothing prices declined 6.7%. Prices for computer equipment and supplies continued their downward trend in April, mainly because of lower prices for laptops.

Price increase in Ontario remains the slowest in April

Despite a 0.5 percentage point acceleration of the 12-month all-items index in Ontario between March and April, mainly due to higher gasoline prices, Ontario again posted the smallest increase in consumer prices (+1.3%).

Alberta and Saskatchewan recorded increases of 3.2%, which were the highest of all provinces. These increases mainly reflect higher new housing costs.

For a more detailed analysis, consult the publication Consumer Price Index.

Available on CANSIM: tables 326-0009, 326-0012, 326-0015 and 326-0020 to 326-0022.

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.

The April 2008 issue of the Consumer Price Index, Vol. 87, no. 4 (62-001-XWE, free), is now available from the Publications module of our website. A paper copy is also available (62-001-XPE, $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).