Between March 2002 and March 2003, the Consumer Price Index (CPI) increased
4.3%, an advance smaller than the 4.6% climb recorded in February. This
slowdown is explained in large part by a weaker increase in gasoline
prices. The CPI excluding energy, which had risen 3.4% between February
2002 and February 2003, also slowed down in March, increasing 3.2%.
The base effect discernible since October 2002, which was mainly the
result of falling gasoline prices in October and November 2001, faded
away in March. In fact, the March 2002 index, which is the comparison
index for calculating the 12-month percentage change, returned to a level
similar to that preceding the drop in the index in October 2001. The
jump in gasoline prices in March 2002 served to reduce the gap between
the March 2003 CPI and the March 2002 CPI.
Several factors helped to slow the CPI increase from 4.6% in February
to 4.3% in March. The primary factor is the slowdown in the increase
in gasoline prices for which the 12-month percentage change dropped from
32.1% in February to 22.1% in March. The contribution of travel tours
to the CPI advance was also noticeably weaker. In fact, while the prices
of this service had increased 9.0% between February 2002 and February
2003, in March 2003 they rose only 0.2% above their March 2002 level.
The same is true for electricity. An increase of 2.0% was observed between
February 2002 and February 2003 while in March 2003 electricity prices
were lower than in March 2002 by 0.8%. Finally, a more pronounced drop
in prices for traveller accommodation is also among the factors slowing
the 12-month increase in the CPI in March. Moreover, the 12-month variation
of this index has been negative since June 2001.
However, two main factors mitigated the effect of these slowdowns somewhat,
namely natural gas prices, which recorded a 23.5% increase in March,
while they rose only 6.8% in February. Similarly, fuel oil prices saw
their 12-month percentage change rise from 47.8% in February to 62.1%
in March. The natural gas index rose from February to March 2003, but
the main explanation for the acceleration of the 12-month percentage
change remains the drop in this index in March 2002, which increases
the gap compared with March 2003. In March 2002, the sale of a natural
gas field caused the index to drop, as a portion of the revenues were
distributed to consumers in northern Alberta. However, in the case of
fuel oil, it is primarily the 12.4% increase between February and March
2003 that noticeably increased the contribution of fuel oil to the 12-month
advance in the CPI.
Monthly percentage change in the CPI: +0.4%
Monthly percentage change in the CPI excluding energy: +0.2%
The CPI rose 0.4% between February and March 2003, which constitutes
a smaller rise than the increases of 0.8% in January and 0.7% in February.
The main factors behind the March increase have been higher natural gas
and fuel oil prices. The increase in the prices for gasoline and women’s
clothing, along with higher homeowner’s replacement cost and mortgage
interest cost, also helped to drive up the All-items CPI. In contrast,
the CPI advance was mostly offset by the drop in prices for traveller
accommodation.
Natural gas prices showed a monthly increase of 7.2% from February to
March 2003. The upward pressure on the index came almost entirely from
a 24.5% jump in prices in Alberta. Higher recovery costs combined with
the elimination of the $15 credit granted to customers in southern Alberta
in February explain this advance in the natural gas index.
The fuel oil index rose for the third consecutive month. The monthly
advance of 12.4% observed in March 2003 was slightly higher than the
increases recorded in February (+11.9%) and January (+9.4%), and stems
mainly from higher wholesale prices. The indexes for all provinces advanced.
After advancing 6.2% in January and 7.0% in February, gasoline prices
increased by only 0.9% in March 2003. Increases were observed in some
provinces, such as British Columbia (+8.7%) and Prince Edward Island
(+6.4%), whereas prices dropped in others, as was the case in Ontario
(-1.1%) and Quebec (-0.6%).
Women’s clothing prices grew 2.3% between February and March 2003.
The launch of new spring-summer collections was accompanied by mark-ups
in prices for some articles of women’s clothing.
The index for homeowners’ replacement cost (+0.8%) and mortgage
interest cost (+0.2%) also contributed to the monthly advance in the
CPI. The increase in new housing prices pushed these two indexes up,
while the mortgage interest cost index was also influenced by higher
interest rates.
The drop in prices for traveller accommodation (-5.8%) was the main factor
offsetting increases in the CPI. Price declines were observed in all
provinces except Newfoundland and Labrador (+0.6%). The most substantial
drops were observed in Quebec (-12.5%) and Ontario (-6.0%). Reduced demand
is the primary factor behind these drops.
For the first time since the package tour index was introduced in October
1978, a drop has been recorded in this index (-1.2%) in March. The seasonal
trend of price increases for Florida destinations, always in high demand
in March, was not felt this year.
Increase of 0.1% in the seasonally adjusted CPI between February 2003 and March 2003
After correcting for seasonal influences, the All-items CPI went up
0.1% in March, compared with an increase of 0.4% in February. The alcoholic
beverages and tobacco products index (+0.7%) rose the most. The increases
in the seasonally adjusted indexes for shelter (+0.6%), transportation
(+0.3%), clothing and footwear (+0.1%) and food (+0.1%) also contributed
to the monthly increase. The seasonally adjusted index for health and
personal care remained unchanged, while the indexes for recreation, education
and reading (-0.4%) and household operations and furnishings (-0.1%)
partially offset the increases.
Special aggregates
All-items excluding the 8 most volatile components
(Bank of Canada definition)
The prices of goods and services included in the All-items index excluding
the 8 most volatile components as defined by the Bank of Canada increased
2.9% between March 2002 and March 2003. This increase constitutes a slowdown
compared with the 12-month variations for the two preceding months, namely
3.3% in January and 3.1% in February. The deceleration in the 12-month
increase of travel tours, which dropped from 9.0% in February to 0.2%
in March, partially explains this slowdown.
The All-items index excluding the 8 most volatile components as defined
by the Bank of Canada increased 0.2% in March 2003, after advancing 0.5%
in January and 0.7% in February. Higher clothing prices contributed the
most to the monthly advance of this index.
Energy
Energy prices jumped 17.5% between March 2002 and March 2003. Higher
gasoline prices (+22.1%) accounted for two thirds of this increase, while
the rise in fuel oil prices (+62.1%) and natural gas prices (+23.5%)
accounts for the remainder of the increase. Only the electricity index
(-0.8%) dampened the advance somewhat.
Between February and March 2003, energy prices were up 2.0%. Excluding
electricity prices, which dropped slightly (-0.1%), the prices of all
energy components increased. Natural gas prices rose 7.2%, fuel oil prices
jumped 12.4% and gasoline prices advanced 0.9%. The price of a barrel
of crude oil rose once again in early March, which partially explains
these increases.
Goods and services
Prices for goods rose 4.4% from March 2002 to March 2003, after recording
an increase of 4.8% in February. The rise in the non-durable goods index
(+7.8%) stemmed from gasoline, cigarette, natural gas, and fuel oil prices.
Drops in lettuce and orange prices served to offset these increases somewhat.
The durable goods category also advanced (+0.6%), owing to increases
in the prices of new automotive vehicles and recreational vehicles. The
semi-durable goods index decreased 0.7%, owing to downward pressure from
the women’s and men’s clothing categories.
The cost of services increased 4.2% between March 2002 and March 2003.
This increase was smaller than the 4.5% recorded in February.
The goods index progressed 0.6% between February 2003 and March 2003.
The non-durable goods index (+0.7%), which carries more weight than the
semi-durable goods index (+1.9%), had a more significant impact on the
goods index. The durable goods index remained unchanged in March. The
increase in prices of non-durable goods stems mainly from natural gas,
fuel oil and gasoline prices. The drops in prices for non-alcoholic beverages,
toilet preparations and cosmetics, as well as for oranges, very slightly
slowed the advance in the non-durable goods index. The increase in the
semi-durable goods index is explained mainly by the rise in clothing
prices.
The services index went up 0.1% in March 2003, after having increased
0.5% in February.
