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62-001-XIB
Consumer Price Index
April 2003

Highlights


Twelve-month percentage change in the CPI: +3.0%

Twelve-month percentage change in the CPI excluding energy: +2.7%

In April 2003, the Consumer Price Index (CPI) was 3.0% higher than a year ago, a significant reduction from the 4.3% twelve-month increase posted in March 2003. An important drop in gasoline prices from March to April 2003 was the main cause of this slowdown. The 12-month change in the CPI excluding energy also fell, from a 3.2% rise between March 2002 and March 2003 to a 2.7% increase from April 2002 to April 2003.

Gasoline prices were only 4.1% above April 2002 levels, compared to a 22.1% increase between March 2002 and March 2003. Other factors helped slow the rise in the CPI from 4.3% in March to 3.0% in April. Refunds received by Ontario consumers caused the electricity index to be 11.0% lower than a year ago. Without the electricity refunds, the 12-month increase in the CPI would have been 3.2% rather than 3.0%. Fuel oil prices also contributed to weakening the rise in the CPI. They had increased by 62.1% between March 2002 and March 2003, whereas in April 2003, they were only 25.2% higher than year-earlier levels.

The largest mitigating impact on these slowdowns came from higher natural gas prices. The price of natural gas had posted an increase of 23.5% between March 2002 and March 2003, whereas in April 2003 it was 49.6% higher than in April 2002. From March to September 2002, the natural gas index was lowered by the effects of a payment to Northern Alberta customers following the sale of a gas field. An additional 12.9% drop due to lower prices in Ontario between March and April 2002 and a 5.6% price increase from March to April 2003 all contributed to make the natural gas index 49.6% higher in April 2003 compared to April 2002.

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

Monthly percentage change in the CPI: -0.7%

Monthly percentage change in the CPI excluding energy: 0.0%

The all-items CPI fell by 0.7% in April mostly under the influence of energy prices, after having increased by 0.4% in March. This reduction was the most significant one since the 0.9% decrease in November 2001. As in November 2001, the downward pressure on the CPI came mainly from the drop in gasoline prices. The drop in electricity prices in Ontario generated by a refund to consumers was the second major factor contributing to the monthly drop in the index, while women’s clothing also played a role. The decline in the index was slowed by the rise in the price of natural gas. Excluding energy, the CPI remained stable from March to April.

Gasoline prices fell by an average of 9.0% from March to April, the result of lower wholesale and crude oil prices. The price reductions were felt across Canada. The biggest price drop was recorded in Quebec (-10.3%), while in Prince Edward Island the decline was only 1.7%.

The 10.1% drop in the electricity index for Canada was entirely attributed to the 31.7% drop in the index in Ontario. Recent Ontario legislation set the price of electricity at 4.3¢ per kilowatt-hour starting on December 1, 2002 and provided for refunds for amounts paid over 4.3¢ from May 1, 2002. A first payment of $75 was mailed to consumers in December and most of the electricity companies credited their customers for the balance of the refund on their April 2003 bills.

The price of fuel oil fell by 18.0% between March and April. This was the largest monthly drop since the series was introduced in 1949. As in the case of gasoline, this fall is attributable to the drop in crude oil prices. Price reductions have been observed in each province, varying between 5.3% and 25.2%.

The women’s clothing index fell by 3.8% in April. This reduction was due to widespread sales in most categories of women’s clothing. Price drops are often recorded for such merchandise in April. The decreases were felt mostly in Manitoba, Ontario, Alberta and Quebec.

In the past nine years, there has been a decrease in the price of natural gas in April, whereas this April the index increased by 5.6%. The biggest increases were felt in British Columbia and Ontario. An increase in the price of the commodity explains the increase in the index in British Columbia, whereas in Ontario, the increase is attributed to the increase in the gas delivery charge and a temporary surcharge designed to recover energy costs that were higher than what the company charged its clients in January and February 2003.

The seasonally adjusted CPI decreased by 0.7% between March 2003 and April 2003

After correcting for seasonal influences, the all-items CPI fell 0.7% in April, after having increased by 0.1% in March. The transportation index, largely due to lower gasoline prices, registered the largest drop (-1.9%). Declines in the seasonally adjusted indexes for shelter (-0.8%), clothing and footwear (-0.5%), recreation, education and reading (-0.2%), household operations and furnishings (-0.1%) and food (-0.1%) also contributed to the monthly decrease. The alcoholic beverages and tobacco products index (+0.5%) and the health and personal care index (+0.2%) 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 by 2.1% between April 2002 and April 2003. This increase represents a significant slowdown compared with the 12-month variations for the two previous months (+3.1% in February and +2.9% in March). Excluding the effect of the electricity refunds in Ontario, the 12-month change in the index would have been 2.4%.

The all-items index excluding the 8 most volatile components as defined by the Bank of Canada fell 0.3% between March and April. This decline is largely due to electricity refunds received by most residents of Ontario, the result of provincial legislation that was introduced in December 2002.

Energy

After posting 12-month increases of more than 15% for three consecutive months, April’s energy prices were only 6.2% higher than their April 2002 level. While gasoline prices were largely responsible for this slowdown, the 49.6% increase in natural gas prices explained most of the 6.2% increase. Gasoline prices increased only 4.1% between April 2002 and April 2003 after posting increases above 20% since December 2002. In April, fuel oil prices were 25.2% higher than their April 2002 level, while electricity prices fell by 11.0% compared to April 2002.

Between March and April 2003, energy prices fell by 8.1%. Other than the price of natural gas, which increased by 5.6%, the prices of all energy components declined. Gasoline prices decreased by 9.0%, the electricity index was down 10.1% and fuel oil prices dropped by 18.0%. Crude oil prices fell significantly during April, accounting for a large part of the price declines for gasoline and fuel oil.

Goods and services

Prices in the goods sector increased 2.0% from April 2002 to April 2003, after posting a 4.4% increase in March. The increase in the non-durable goods index (+4.0%) was boosted by natural gas, cigarette, gasoline and fuel oil prices. Refunds paid to Ontario electricity consumers and lower potato prices somewhat mitigated these increases. The semi-durable goods category index fell by 1.7%, mainly under the pressure of falling clothing prices. The durable goods category index also fell (-0.3%) as a result of the price declines for sporting and athletic equipment, as well as for video equipment, upholstered furniture, and computer equipment and supplies. An increase in the price of recreational vehicles mitigated these declines.

The cost of services increased 3.9% between April 2002 and April 2003. This increase was somewhat weaker than the one posted in March (+4.2%).

The goods index fell by 1.6% between March 2003 and April 2003. Prices for all categories of goods were down. The non-durable goods index (-2.4%), led by gasoline, electricity and fuel oil prices, explained close to 90% of the drop. Only natural gas prices offset the effect of these declines to any significant degree. Semi-durable goods (-1.3%), led by lower clothing prices, also had a downward effect on the goods index. The durable goods index, which had remained stable in March, declined slightly (-0.3%). The decrease in the price of durable goods was largely attributable to the decline in the purchase price of new automotive vehicles.

The services index stood out from the goods index by increasing by 0.2% in April 2003, after having increased by 0.1% in March.

 



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