Highlights

The 12-month increase in the Consumer Price Index (CPI) jumped to 1.6% in April from 0.7% in March. However, April’s 12-month rate of increase is similar to those observed during the last quarter of 2003.

The jump in the 12-month increase from 0.7% to 1.6% was the result of the double impact of energy price movements both this year and last year. Last year, there was a significant 0.7% drop in the CPI between March and April 2003, and this year, there was a 0.2% increase from March to April 2004 (see chart below). As a result, the gap between the April 2004 and April 2003 indexes is greater than the gap between the March indexes.

From March 2003 to April 2003, the CPI fell significantly following strong price decreases for gasoline, as well as a drop in the electricity index caused by refunds to Ontario customers.

From March to April this year, higher electricity rates in Ontario, following the introduction of new legislation, combined with higher gasoline prices were the main factors pushing the index up.

When the effects of energy prices are excluded from the CPI, the 12-month advance in April becomes 1.2%, the same as in March.

The all-items index excluding eight volatile components identified by the Bank of Canada rose 1.8% from April 2003 to April 2004, up from 1.3% in March. The most significant contributing factor was the jump in the 12-month increase of the electricity index from 0.2% in March to 15.1% in April.

On a monthly basis, prices rose 0.2% between March and April this year. This follows a 0.3% rise in March. With the exception of March, the CPI has had no monthly increase or decrease larger than 0.2% over the last 12 months.

Twelve-month percentage change in the CPI: +1.6%
Twelve-month percentage change in the CPI excluding energy: +1.2%

Key factors contributing to the 1.6% increase in the CPI included electricity, gasoline, homeowners’ replacement cost, cigarettes and tuition fees.

On the other hand, consumers paid less for automotive vehicles, computer equipment and supplies, natural gas and fresh vegetables.

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

The electricity index rose on average 15.1%. The most significant contributing factor was a 54.7% increase in Ontario’s electricity index.

An electricity refund legislated by the Ontario government sent the Ontario electricity index plunging in April 2003 and made the April 2004 index higher by comparison. Also, recent legislation replaced the flat rate for electricity with a tiered rate beginning in April 2004.

Gasoline prices were on average 6.9% higher than one year ago. In contrast, they were 4.2% lower in March 2004 compared to March 2003.

Homeowners’ replacement cost, which represents the worn out structural portion of housing and is estimated using new housing prices (excluding land), was up 6.1%.

Cigarette prices were 7.9% higher than in April 2003. This increase was primarily due to higher provincial tobacco taxes introduced in the last twelve months in most provinces and recently in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, Manitoba and Saskatchewan.

Tuition fees increased on average 8.1%. Although they are only collected once a year, in September, they continue to be one of the important factors impacting the 12-month change in the CPI. The average increase in tuition fees for the previous three years had been 3.8%.

Despite two consecutive monthly increases, automotive vehicle prices are still 1.5% lower compared to April 2003 levels. This was primarily a result of incentives from automotive vehicle manufacturers put in place throughout the last 12 months.

Computer equipment and supplies fell 16.7% as price declines were registered for both desktops and laptops.

Natural gas prices fell on average by 8.9%. Most of this drop is attributable to the Alberta and Ontario markets.

The index for fresh vegetables fell 8.6%. Decreases can be attributed to favorable weather in the growing regions of producer countries.

Monthly percentage change in the CPI: +0.2%
Monthly percentage change in the CPI excluding energy: +0.1%

Prices rose 0.2% between March and April this year. This follows a 0.3% rise in the previous month.

Higher prices for electricity, gasoline, automotive vehicles and natural gas exerted upward pressure on the all-items CPI.

Downward pressure came from price decreases for fresh vegetables, women’s clothing, automotive vehicle insurance premiums, computer equipment and supplies and men’s clothing.

Excluding the influence of energy prices, the CPI increased 0.1%.

The 3.3% increase in the electricity index for Canada was mostly attributable to a 5.7% increase in Ontario along with a 6.5% increase in British Columbia.

Under Ontario legislation effective April 1st, electricity tariffs increased from a fixed rate of 4.3 cents per kilowatt-hour to 4.7 cents per kilowatt-hour for the first 750 kilowatt-hours used in a month. The price goes up to 5.5 cents per kilowatt-hour for usage over that threshold. There were also some changes in distribution charges.

Low precipitation levels have had BC Hydro concerned about the low water levels of their reservoirs needed to produce electricity. As a result, they are applying to move forward the implementation date of their original rate increase application to the BC Utilities Commission (BCUC). Pending its final decision in the fall, the BCUC has approved an interim rate increase effective April 1st, 2004.

Gasoline prices increased an average of 1.5% between March and April. This was the fourth consecutive monthly increase as crude oil prices continued to rise.

Automotive vehicle prices rose 0.7% as some manufacturers adjusted their incentive programs.

Natural gas prices increased 3.2% following a 2.5% decrease in March. April’s advance was almost entirely attributable to the removal of the provincial government rebate program in Alberta. The Alberta natural gas index rose by 17.5%.

Fresh vegetable prices fell 6.0% as some crops became available from Canadian hot-house producers.

The women’s clothing index fell by 2.6% in April. This reduction was due to widespread sales in most categories of women’s clothing. Price drops of this magnitude are typical for women’s clothing at this time of the year. Decreases were seen in all provinces.

Automotive vehicle insurance premiums fell 1.3% as a result of a 2.8% decrease in Ontario and a 9.8% drop in Prince Edward Island.

The Automobile Insurance Rate Stabilization Act legislated by the Ontario government came into effect on April 15th. Lower rates reflecting the changes in the Insurance Act had to be filed by insurance companies for approval. There have been some delays in the approval process which in turn will delay the introduction of the new rate schedules for some companies until later this summer.

Amendments effective April 1st were also made to the Insurance Act in Prince Edward Island. The most important one being the $2,500 limit on liability claims for minor personal injury. Companies operating in this province were also required to file for lower rates reflecting these amendments.

Price decreases for both desktops and laptops caused the computer equipment and supplies index to fall 3.2%.

The index for men’s clothing fell by 1.4% in April 2004. Widespread sale prices were moderated by the introduction of new seasonal clothing items.

The seasonally adjusted CPI increased by 0.2% between March and April

After seasonal adjustment, the CPI increased 0.2% from March to April.

Higher seasonally adjusted indexes for shelter (+0.5%), transportation (+0.5%), alcoholic beverages and tobacco products (+0.6%), household operations and furnishings (+0.2%), recreation, education and reading (+0.1%), and health and personal care (+0.2%) accounted for this increase.

The indexes for clothing and footwear (-0.4%) and food (-0.1%) exerted downward pressure.

Special aggregates

All-items excluding the eight most volatile components (Bank of Canada definition)

The all-items index excluding eight volatile components identified by the Bank of Canada rose 1.8% in April, up from 1.3% in March.

Contributing most to the rise in April were higher electricity prices, homeowners’ replacement cost, tuition fees, restaurant meals prices, as well as homeowners’ and automotive vehicle insurance premiums.

The jump in the 12-month increase in the electricity index from 0.2% in March to 15.1% in April was due to both the refund paid to Ontario’s electricity customers in April 2003 and new higher rates introduced in April 2004.

On a monthly basis, the all-items index excluding eight volatile components identified by the Bank of Canada rose 0.2%.

Upward pressure came mostly from higher prices for electricity and automotive vehicles. Lower prices for women’s clothing were the principal source of downward pressure on the index.

Energy

Energy prices rose 6.4% from April 2003 to April 2004.

Higher electricity (+15.1%) and gasoline (+6.9%) prices accounted for the increase. Over the same period, prices for natural gas (-8.9%) and fuel oil (-3.8%) fell.

From March to April, energy prices increased 2.0%, mostly under the influence of price increases for electricity (+3.3%), gasoline (+1.5%) and natural gas (+3.2%). Downward pressure came from lower prices for fuel oil (-2.3%).

Goods and services

From April 2003 to April 2004, prices in the goods sector increased 0.9% after posting two consecutive decreases in February (-0.8%) and March (-0.9%).

All of the upward pressure came from the non-durable goods index (+2.8%), mainly as the result of higher prices for electricity (+15.1%), gasoline (+6.9%) and cigarettes (+7.9%). The durable goods index decreased 1.9%, due mainly to decreases in the price of automotive vehicles, and computer equipment and supplies. The semi-durable goods index fell 0.7%, as about two thirds of the goods recorded price decreases.

Widespread price increases caused the services index to climb 2.3% compared with April 2003. Upward pressure came in large part from higher homeowners’ replacement cost, tuition fees, restaurant meal prices, as well as homeowners’ insurance premiums and property taxes

Between March and April 2004, the increase in the price of goods averaged 0.3%.

Non-durable goods prices rose 0.6%, mostly under the pressure of higher electricity and gasoline prices. The durable goods index was pushed up 0.3% mainly under the influence of higher automotive vehicle prices. Price decreases for women’s, men’s and children’s clothing explained most of the 1.3% decrease in the semi-durable goods index.

Higher costs for air transportation, dental care, homeowners’ maintenance and repairs, as well as automotive vehicle maintenance and repair services were the main contributors to the 0.2% increase in the services index between March and April 2004.