Highlights

In January 2006, consumers paid 0.5% more than in December 2005 for the goods and services included in the Consumer Price Index (CPI) basket, the first monthly increase since September 2005. This increase was mainly due to higher energy prices as the All-items excluding energy index remained unchanged between December 2005 and January 2006.

The All-items index excluding the eight volatile components identified by the Bank of Canada also remained unchanged between December 2005 and January 2006.

On a 12-month basis, the All-items CPI rose by 2.8% in January, compared to a 2.2% rise in December. The All-items excluding energy index increased by 1.6% from January 2005 to January 2006, up slightly from the 1.4% rise in December.

The All-items index excluding the eight volatile components identified by the Bank of Canada rose by 1.7% between January 2005 and January 2006, slightly more than the 1.6% increase recorded in December.

Twelve-month percentage change in the CPI : +2.8%
Twelve-month percentage change in the CPI excluding energy: +1.6%

In January, the CPI recorded a 2.8% increase as compared to January 2005. The main factors behind this increase were gasoline, natural gas, the purchase and leasing of automotive vehicles, and homeowner’s replacement cost.

These increases were moderated by lower prices for insurance premiums for automotive vehicles, computer equipment and supplies, and traveller accommodation.

Gasoline prices rose by 19.2% between January 2005 and January 2006. Increases were posted in all provinces and ranged from 13.7% in British Columbia to 24.5% in Prince Edward Island.

In January, natural gas prices were 26.0% higher compared to January 2005. All provinces posted increases, Ontario (+27.3%) and Alberta (+35.9%) having contributed most of the increase.

Percentage Change from the Same Month of the Previous Year, Canada

Prices for purchase and leasing of automotive vehicles rose an average 2.8% in January. All provinces posted price increases compared to January 2005. The most modest increases were in Alberta (+2.0%) and the strongest in Prince Edward Island (+4.5%).

With continued higher costs for materials and labour, homeowner’s replacement cost rose 5.2% in January, its largest increase since May 2005 when it rose 5.3%. Homeowner’s replacement cost represents the worn out structural portion of housing, and is estimated using new housing prices (excluding land).

Exerting a moderating effect, insurance premiums for automotive vehicles were 2.6% lower in January 2006 as compared to the same month a year earlier. The decrease reflected declines that took place throughout 2005.

Continuing its downward trend, the index for computer equipment and supplies plunged by 15.7% as compared to January 2005.

Traveller accommodation also moderated the increase in the All-items index by falling 5.1%, the same drop as in December 2005. All provinces posted decreases ranging from 1.3% in Saskatchewan to 6.2% in Ontario.

For six of the eight major components of the CPI, prices in January 2006 were higher than those of January 2005. The indexes for shelter (+3.9%), transportation (+5.4%), and food (+2.8%) exerted the strongest upward pressure. The indexes for clothing and footwear (-1.0%) and for recreation, education and reading (-0.2%) exerted downward pressure.

Monthly percentage change in the CPI: +0.5%
Monthly percentage change in the CPI excluding energy: 0.0%

Between December and January, the CPI rose by 0.5%, from a level of 128.1 to 128.8 (1992=100). Increases in the prices of gasoline, natural gas and fresh vegetables were offset very slightly by lower prices for travel tours, and men’s clothing.

Gasoline prices rose by 6.5% between December 2005 and January 2006, after three consecutive months of decline. All provinces recorded increases, which ranged from 2.6% in British Columbia to 7.9% in Ontario. These increases stemmed from market volatility and a rise in crude oil prices.

After a 6.1% drop in December, the price of natural gas increased by 15.4% in January 2006. This was the largest increase since October 2002, when an 18.5% rise was noted.

All categories of fresh vegetables showed price increases, which led to a 12.4% increase in the fresh vegetable index. Adverse weather conditions particularly affected tomato (+39.6%) and “other fresh vegetables” (+6.0%) prices.

Pushing down the All-items index in January 2006, the travel tours index dropped by 12.6%. Every province posted a decrease. The biggest decreases were recorded in Ontario (-15.7%), while Alberta showed the smallest (-4.9%). Travel tour prices are recorded every January, February and March, when they are most popular with Canadians. Of these three months, January is the one when demand is at its lowest. Since January prices are directly compared to those of the previous March, the index normally falls in January.

Prices for men’s clothing fell by 2.8% in January 2006 compared to December 2005. The drop was mainly caused by discount sales in Ontario (-5.7%). All provinces, except Newfoundland and Labrador, and Manitoba, recorded decreases.

The seasonally adjusted CPI increased 0.5% between December and January
Seasonally adjusted, the CPI was up 0.5% between December and January 2006.

Upward pressure came from the indexes for the shelter (+1.2%), transportation (+1.4%), food (+0.8%), household operations and furnishings (+0.2%), and alcoholic beverages and tobacco products (+0.3%).

The seasonally adjusted index was pushed down only by the clothing and footwear index (-0.8%).

The indexes for health and personal care as well as recreation, education and reading remained stable in January.

Special aggregates

All-items index excluding the eight volatile components defined by the Bank of Canada

The All-items index excluding the eight volatile components identified by the Bank of Canada increased by 1.7% between January 2005 and January 2006. The main factors behind this increase were the purchase and leasing of automotive vehicles (+2.8%), homeowner’s replacement cost (+5.2%), restaurant meals (+3.0%) and electricity (+4.7%). The increase was mitigated by a drop in insurance premiums for automotive vehicles (-2.6%), as well as prices for computer equipment and supplies (-15.7%), traveller accommodation (-5.1%) and video equipment (-9.0%).

Between December 2005 and January 2006, the All-items index excluding the eight volatile components identified by the Bank of Canada remained stable. The main upward pressure came from electricity (+2.3%), non-alcoholic beverages (+6.6%) and water in the shelter component (+5.2%). Downward factors were travel tours (-12.6%), men’s clothing (-2.8%), and women’s footwear (-7.0%).

Energy

Following a 10.2% rise between December 2004 and December 2005, the energy index rose 15.3% between January 2005 and January 2006.
Although all components contributed to the increase in the energy index in January 2006, the gasoline index (+19.2%) was the main factor. Prices for natural gas (+26.0%), electricity (+4.7%), fuel oil (+19.3%), and fuel, parts and supplies for recreational vehicles (+11.7%) also had an impact.

On a monthly basis, the energy index was up 5.9% largely under the influence of the price of gasoline (+6.5%), though natural gas (+15.4%), fuel oil (+2.0%), electricity (+2.3%) and fuel, parts and supplies for recreational vehicles (+3.1%) components also recorded increases.

Goods and services

Prices in the goods sector were up 3.7% between January 2005 and January 2006.

The increase was the result of price increases for non-durable (+6.2%) and durable goods (+0.3%), as semi-durable goods recorded a decrease (-0.6%).

In January, strong upward pressure on the index for non-durable goods is attributed to the prices of gasoline (+19.2%), natural gas (+26.0%), electricity (+4.7%) and fuel oil (+19.3%). These price increases were offset slightly by the falling prices of pork (-5.3%) and beef (-1.5%).

The durable goods index increased 0.3%, largely as a result of higher prices for the purchase of automotive vehicles (+2.8%). Lower prices for computer equipment and supplies (-15.7%) and video equipment (-9.0%) offset the increase.

The 0.6% drop in the index for semi-durable goods was due mostly to decreases in prices for women’s footwear (-6.5%) and women’s clothing (-1.0%) but was offset mainly by higher prices for newspapers (+3.3%).

The services index was up 2.1% compared to January of last year. Increases in homeowner’s replacement cost (+5.2%), the price of restaurant meals (+3.0%) and property taxes (+3.2%) played the largest part in this increase. Most of the downward pressure came from lower costs for insurance premiums for automotive vehicles (-2.6%) and traveller accommodation (-5.1%).

The goods index rose by 1.2% between December 2005 and January 2006, solely as a result of increases in the non-durable goods index (+2.5%). The semi-durable (-1.1%) and durable (-0.2%) goods indexes declined.

Between December 2005 and January 2006, the cost of services remained stable. A rise in water rates (+5.2%) was the main upward factor, while travel tours (-12.6%) were the main downward factor.