Highlights
Consumer prices rose 1.2% between January 2006 and January 2007. This drop in the growth rate came on the heels of a 1.6% increase posted in December. The January 2007 reduction in gasoline prices was the main factor underlying this slowdown. For a fifth consecutive month, the increase in the all-items CPI was under 2.0%.
Homeowners started off the year the same way they ended the previous one, and spent slightly more again this month on housing costs. However, consumers benefited from a drop in gasoline prices in early 2007. This reduction in gasoline prices helped offset the impact of prices in the owned accommodation component and exerted downward pressure on the all-items CPI.
On a twelve-month basis, the all-items index excluding energy rose by 1.8% in January 2007, a slight increase compared to the 1.7% increase posted in the previous month. With the exception of a 2.0% rise posted in October 2006, the all-items index excluding energy components has remained under 2.0% since June 2003.
The core CPI, used by the Bank of Canada for the purpose of monitoring the inflation-control target, rose by 2.1% between January 2006 and January 2007, following a 2.0% increase in December.
On a monthly basis, the all-items index grew by 0.1% in January 2007, following two consecutive 0.2% increases over the previous two months. The rise in prices for fresh vegetables and women’s clothing was almost entirely offset by lower prices for gasoline and travel tours.
Between December 2006 and January 2007, excluding the energy components, the all-items index rose by 0.2% after a drop of 0.1% reported in December. The increase in the price of fresh vegetables, women’s clothing and non-alcoholic beverages exerted upward pressure on the index this month.
In January 2007, the trend in the core index was similar to that in the all-items index excluding energy. On a monthly basis, the core index posted an increase of 0.1%, compared to December’s 0.2% drop.
Twelve-month percentage change in the CPI: +1.2%
Twelve-month percentage change in the CPI excluding energy: +1.8%
Consumers had to spend 1.2% more between January 2006 and January 2007 on goods and services included in the CPI basket, following a 1.6% increase in the previous month. The continued pressure of prices in the owned accommodation sector remained the key factor in this increase.
Percentage change from the same month of the previous year, Canada
The increase in mortgage interest cost and homeowner’s replacement cost continued to bolster the all-items index, whose growth was slowed by the January 2007 decline in gasoline and natural gas prices.
Canadians across the country paid more for their goods and services in January 2007 compared to January 2006. The continued higher costs related to accommodations placed Alberta in the lead, with a posted increase of 3.9% this month, which was nonetheless down compared to the 4.7% rise posted in December 2006. The twelve-month percentage change in the all-items index in British Columbia (+2.2%), Manitoba (+1.7%) and Saskatchewan (+1.4%) surpassed the national average in January 2007. Ontario (+0.3%), Quebec (+0.6%) and the Atlantic Provinces posted growth below the all-items CPI for Canada.
Percentage change in the All-items index from the same month of the previous year,
Canada and provinces
The twelve-month rise in mortgage interest cost continued the upward climb begun in early 2006, reaching 5.1% in January 2007, a slight increase compared to the 4.9% growth posted in the previous month.
After two consecutive months of 8.2% growth, the growth in the homeowner’s replacement cost index, which represents the worn-out structural portion of housing and is estimated using new housing prices (excluding land), slowed somewhat, rising only 7.6% between January 2006 and January 2007. The growth in this index had reached a high of 8.8% in September and October 2006 before starting to decline in November 2006.
The dizzying surge in homeowner’s replacement cost in Alberta has slowly been abating since September 2006, when the twelve-month change reached a record high of 48.6%. Nonetheless, in January 2007, this index rose by 37.1% in this province, with Saskatchewan trailing far behind with an increase of 13.5%. Elsewhere in Canada, in Manitoba (+6.4%), British Columbia (+4.7%), Ontario (+3.8%) and Quebec (+3.0%), this index posted somewhat smaller increases.
The increase in the price of food purchased in restaurants (+2.5%), cigarettes (+5.0%) and electricity (+4.2%) also contributed to the hike in the all-items index between January 2006 and January 2007.
Almost all Canadian consumers enjoyed a drop in gasoline prices in January 2007. Compared to the same month in the previous year, the price of gasoline fell by 7.6% across Canada. This drop was mainly attributable the 19.2% leap posted last year resulting from the unstable international geopolitical situation which helped widen the gap between the January 2006 and January 2007 price levels.
The largest decreases were posted in Ontario (-13.0%), New Brunswick (-9.9% and Quebec (-9.2%). While the other provinces posted price declines ranging from 1.7% (Saskatchewan) to 6.1% (Nova Scotia), British Columbia residents paid 6.4% more for gasoline this month than last year.
In addition to the decrease in gasoline prices, the drop in natural gas prices also reduced energy costs in January. On a twelve-month basis, the price of natural gas plummeted by 21.5%. This kind of drop had not been seen since September 2002, and comes on the heels of six consecutive months of the year over year percentage change decline. Seasonal temperatures and high stocks of this energy component kept natural gas prices low in January 2007.
Natural gas prices dropped right across the country, but Ontario (-27.4%), Alberta (-21.1%) and British Columbia (-8.2%) placed the strongest downward pressure on this index between January 2006 and January 2007.
Prices for purchasing and leasing automotive vehicles (-1.4%), fresh vegetables (-8.4%) and computer equipment and supplies (-17.8%) also exerted downward pressure on the all-items index in January 2007.
Non-seasonally adjusted monthly percentage change in the CPI: +0.1%
Non-seasonally adjusted monthly percentage change in the CPI excluding energy: +0.2%
On a monthly basis, the all-items CPI rose by 0.1% following two consecutive months posting growth of 0.2%. In January 2007, the increase in the price of fresh vegetables, women’s clothing and non-alcoholic beverages was almost entirely offset by the drop in the price of gasoline and travel tours between December 2006 and January 2007.
The price of fresh vegetables rose by 7.0% in January 2007. The increase in the price of potatoes, carrots, onions, mushrooms and broccoli, among others, pushed this index up. Seasonal effects, which are normally observed in January, contributed to the higher prices for all of these vegetables.
After three uninterrupted months of decline, the price of women’s clothing jumped by 3.9% in January. This increase indicated a return to normal prices after the discounts on women’s lines since October 2006.
True to historical trends, the price of non-alcoholic beverages rose by 7.2% between December 2006 and January 2007, following the price declines posted in the previous month, which reflected the holiday promotions.
The month-over-month decrease of 3.1% in the price of gasoline in January 2007 exerted a strong downward pull on the all-items CPI, mainly from Ontario and Quebec. In January 2007, Ontario residents paid 6.4% less for gasoline than in December 2006, and Quebec residents saved 3.4% over the previous month. However, consumers in the provinces west of Manitoba and those in New Brunswick had to pay a bit more to fill their vehicles in January.
Because Canadians are more inclined to purchase travel tours in the first three months of the year, prices for the latter are recorded for January, February and March. This year, the price of travel tours fell by 11.2% in January compared to March of the previous year. Every province posted drops this month, ranging from -12.9% in Ontario to -3.7% in Manitoba. The index normally falls in January when the demand for travel tours is at its lowest in the high season.
Albeit to a lesser extent, the price of air transportation (-5.2%), sports and athletic equipment (-7.2%) and natural gas (-2.1%) also had a moderating impact on the all-items CPI between December 2006 and January 2007.
The seasonally adjusted CPI remains unchanged between December and January
The seasonally adjusted CPI remained unchanged between December 2006 and January 2007. Almost all components posted increases this month. The growth in the indexes for food (+0.6%), clothing and footwear (+1.5%), housing (+0.2%), alcoholic beverages and tobacco products (+0.7%), recreation, education and reading (+0.2%), household operations and furnishings (+0.1%) and health and personal care (+0.2%) pushed up the seasonally adjusted all-items index. However, the 0.7% drop in transportation prices completely offset the positive pressure exerted on the seasonally adjusted all-items index in January.
The seasonally adjusted Core Index as established by the Bank of Canada rose by 0.2% between December 2006 and January 2007.
Special aggregates
Core CPI published on behalf of the Bank of Canada
The Core Consumer Price Index is obtained by removing the effect of the changes in indirect taxes from the all-items CPI from which the eight most volatile components identified by the Bank of Canada have been excluded. These volatile components are fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; heating oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies.
The 12-month change in the Core Index as identified by the Bank of Canada was 2.1% between January 2006 and January 2007, a slight increase following a 2.0% rise in December. Month-over-month, this index edged up 0.1% in January 2007, as compared to the 0.2% decline in the previous month.
Energy
The drop in the price of gasoline and natural gas pushed the energy index down by 5.6% between January 2006 and January 2007. This drop followed a temporary jump of 1.5% posted in December, which had been preceded by three consecutive months of declining twelve month variation of the energy indexes.
Between January 2006 and January 2007, the price of gasoline fell by 7.6% and the price of natural gas plummeted by 21.5%. The price of heating oil and other fuels (-2.7%), along with that of fuel, parts and supplies for recreational vehicles (-1.4%) contributed to the drop in the energy index. However, the price of electricity (+4.2%) exerted upward pressure on this index in January 2007.
The monthly energy index fell by 1.6% between December 2006 and January 2007. With the exception of heating oil and other fuels (+4.4%), all components of this index posted declines over this same period. Gasoline (-3.1%), natural gas (-2.1%), parts and supplies for recreational vehicles (-1.2%) and electricity (-0.1%) all contributed to the decline in the energy index.
Goods and services
Following a 0.1% increase the previous month, the goods index fell by 1.0% between January 2006 and January 2007. The prices of all components of this index posted declines this month.
The main factor responsible for the 2.1% decrease in the durable goods index was the drop in the price of purchasing automotive vehicles (-1.4%). The drop in the price of computer equipment and supplies (-17.8%), video equipment (-11.5%) and other furniture (-7.2%) also contributed to the downward push on the price of durable goods.
In January 2007, the drop in the price of gasoline (-7.6%), natural gas (-21.5%) and fresh vegetables (-8.4%) pushed back the non-durable goods index by 0.4% over the past twelve months. However, the increase in the price of cigarettes (+5.0%) and the rise in electricity rates (+4.2%) slowed the fall in the non-durable goods index somewhat.
The price of toys, games and hobby supplies (-6.0%) and men’s clothing (-2.4%) were the main factors behind the 0.9% decrease in the semi-durable goods index.
On a month-to-month basis, the goods index rose 0.2% in January 2007. Non-durable goods (+0.1%) and semi-durable goods (+0.6%) pushed the index upward, while the drop in the price of durable goods (-0.1%) slowed the rise in the goods index somewhat between December 2006 and January 2007.
Between January 2006 and January 2007, the price of services climbed 3.1%. The increase in the index for mortgage interest cost (+5.1%) and homeowners’ replacement cost (+7.6%) was the main contributor to the rise in the services index.
The monthly services index decreased slightly by 0.1% between December 2006 and January 2007 following a 0.2% increase the previous month.
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