Retail Services Price Index, fourth quarter 2014
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The Retail Services Price Index (RSPI) rose 1.2% in the fourth quarter, with 7 of the 10 major retail sectors posting margin gains. This was the fifth consecutive quarterly increase.
Retail margins for food and beverage stores increased 2.5% as a result of higher margins at grocery stores (+3.1%), due in part to the recovery of beef product margins from the third quarter of 2014. The prices paid by consumers for fresh or frozen beef rose 5.8% during the fourth quarter, according to the Consumer Price Index (CPI), while processors' prices for fresh and frozen cuts of beef increased 1.9%, according to the Industrial Product Price Index (IPPI). While retailers had absorbed much of the rising input prices in the third quarter, they raised retail prices and passed the cost pressures onto consumers in the fourth quarter. Given its high relative importance in the index, the food and beverage sector was the greatest contributor to the growth in the RSPI in the fourth quarter.
Health and personal care stores (+2.7%) posted the largest increase, due to widespread gains at pharmacies and drug stores (+3.1%). Building material and garden equipment and supplies dealers (+2.4%) rose as a result of higher margins at building material and supplies dealers (+2.3%).
Retail margins for gasoline stations rose 0.9%. Margin gains were moderated by gasoline stations with convenience stores (-2.6%), as a result of declining margins for convenience store goods. Conversely, margins at other gasoline stations rose 2.3% because of higher margins for fuel products. The rack price, as measured by the IPPI for motor gasoline, decreased 16.7% while the CPI for gasoline recorded a smaller percentage decrease of 13.1%. Gasoline stations retained some of the cost savings while passing the rest onto consumers.
Margins at sporting goods, hobby, book and music stores (+2.0%), general merchandise stores (+0.2%) and miscellaneous store retailers (+0.4%) also advanced.
Electronics and appliance stores (-3.5%) moderated the increase of the RSPI as a result of declining margins at appliance, television and other electronics stores (-6.0%).
Furniture and home furnishings stores (-1.8%) and clothing and clothing accessories stores (-0.8%) also declined.
The RSPI increased 4.2%, the largest year-over-year increase of the index since the first quarter of 2009. All 10 major retail sectors were up, with gasoline stations (+9.9%) posting the highest margin increase as they retained most of the input cost savings.
General merchandise stores (+6.0%), building material and garden equipment and supplies dealers (+5.3%) and health and personal care stores (+3.3%) all posted higher margins.
To a lesser extent, food and beverage stores (+2.4%) contributed to the year-over-year increase of the RSPI as a result of stronger margin growth in the fourth quarter. Sporting goods, hobby, book and music stores (+2.3%) and miscellaneous store retailers (+2.3%) also posted margin increases.
Electronics and appliance stores (+2.2%) recorded higher margins on a year-over-year basis despite the quarterly declines posted by this subsector in the fourth quarter of 2014.
Note to readers
The Retail Services Price Index (RSPI) represents the change in the price of the retail service. The price of the retail service is defined as the margin price, which is the difference between the average purchase price and the average selling price of the retail product being priced. The RSPI is not a retail selling price index.
With each release, data for the previous quarter may have been revised. The series are also subject to an annual revision with the release of second quarter data of the following reference year. The indexes are not seasonally adjusted. Data are available at the Canada level only.
The Retail Services Price Index for first quarter will be released in August.
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