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The Consumer Price Index (CPI) increased by 2.2% in April 2007 as compared with April 2006, down slightly from the 2.3% rise posted the previous month. The upward pressure on the all-items index came from the owned accommodation sector again this month, while energy components exerted relatively less influence.
In April 2007, average gasoline prices were slightly lower than they were last year. Prices at the pump, although relatively high, jumped 13.5% between March and April 2006, while they increased only 2.6% over the same months this year, pushing the 12-month variation of the gasoline index in the negative territory (-0.6%).
However, the all-items index without energy components advanced by 2.4% in April, up from 2.1% in March. This was the strongest year-over-year rise posted by this index since May 2003.
In April 2007, the Bank of Canada’s core index was up 2.5% compared with the same month of the previous year. The growth in this index, which is used by the Bank of Canada to monitor the inflation-control target, increased in relation to the previous month, when it was 2.3%. This was the strongest rise posted by this index since March 2003.
On a monthly basis, the all-items index increased by 0.4% between March and April 2007, much less than the 0.7% and 0.8% increases in the two previous months. Two energy components, gasoline and natural gas, accounted for most of the increase in this index in April.
The all-items index without energy components rose by 0.2% in April 2007. The rate of increase in this index dropped for a second straight month, after rising 0.3% in March and 0.6% in February.
The core index rose by 0.2% between March and April 2007 following a 0.3% increase the previous month.
Twelve-month percentage change in the national CPI: +2.2%
Twelve-month percentage change in the national CPI excluding energy: +2.4%
Average prices for all of the goods and services included in the Consumer Price Index were 2.2% higher in April 2007 than in April 2006. The rate of increase was higher the previous month, at 2.3%. The sustained growth in costs for owned accommodation contributed again to most of the upward pressure on the all-items index.
To a lesser extent, price increases for vehicle insurance premiums, restaurant meals and non-alcoholic beverages also exerted upward pressure. However, the decrease in prices for vehicle purchases and leases, computer equipment and natural gas mitigated the rise in the all-items CPI.
Again this month, costs associated with owned accommodation constituted the primary factor behind the rise in consumer prices across the country. Mortgage interest cost rose by 5.6% in April 2007 compared with the same month last year. This increase was mainly driven by higher prices paid by consumers for houses. Twelve-month growth of such magnitude had not been recorded since January 2001. Mortgage interest cost, which measures changes in the amount of mortgage interest owed by homeowners, has posted a 12-month change above 5.0% since the beginning of 2007.
Although its contribution to the rise in the all-items index remains substantial, homeowners’ replacement cost, which represents the worn-out structural portion of housing and is estimated using new housing prices (excluding land) rose 6.5% in April. This index has showed some signs of tapering off since November 2006.
Consumers paid 3.8% more for food in April 2007 as compared with April last year, spending 2.3% more for restaurant meals and 12.9% more at the grocery store for fresh vegetables.
In April 2007, motorists in Canada saw their car insurance premiums rise by 4.3% over April 2006. However, they paid less to fill up their tanks and to purchase and lease new vehicles.
The 1.1% drop in the price of vehicle purchases and leases offset the upward trend in consumer prices to some extent. Consumers were able to get vehicles that were often better equipped for prices lower than those of last year.
Compared to last year, gasoline prices were down 0.6% in April after posting increases of 10.0% and 2.9% in previous months. In April 2007, average gasoline prices were lower than those observed in the same month last year.
In April 2007, consumers paid 4.5% less for natural gas, compared with April 2006. Benefiting most from this downturn in prices were residents of Ontario, where prices fell 12.4%, and Manitoba, where they dropped 8.3%.
In April 2007, natural gas prices declined for a 10th consecutive month on a year-over-year basis. However, the rate of decline in this energy component dropped sharply over the past three months.
Prices for computer equipment and supplies (-18.7%) as well as video equipment (-8.4%) continued the downward trends observed in recent months.
Above-average price gains in Alberta and
Saskachewan
Although the prices paid by consumers were up in all provinces, only residents of Alberta (+5.5%) and Saskatchewan (+2.4%) experienced increases higher than the national average. In those two provinces, the strong increase in homeowners’ replacement cost accounted for most of the upward pressure on consumer prices.
Manitoba posted a 12-month change in consumer prices equivalent to the national average. All other provinces, however, recorded increases of less than 2.0% between April 2006 and April 2007. Consumers in the Atlantic provinces experienced the smallest rises. Residents of Ontario (+1.8%) and British Columbia (+1.9%) faced increases larger than those in the Atlantic provinces, but smaller than those of the Prairie provinces.
In Alberta, homeowners’ replacement cost shot up by 29.1% in April 2007, compared with the same month last year, while in Saskatchewan it climbed by 20.0%. In Alberta, the growth in homeowners’ replacement cost has shown a steady decline since the 48.6% record level posted in September 2006. In Saskatchewan, it has been over 10.0% since December 2006. Driven by the strength of the natural resource sector, economic vitality in these two provinces has stimulated the housing sector.
Upward pressure on consumer prices for residents of Newfoundland and Labrador, Prince Edward Island and New Brunswick was caused mainly by increases in electricity rates that occurred between April 2006 and April 2007.
Non-seasonally adjusted monthly percentage change in the CPI: +0.4%
Non-seasonally adjusted monthly percentage change in the CPI excluding energy: +0.2%
Between March and April 2007, prices for all goods and services rose an average of 0.4%. This change constitutes a pronounced slowdown in relation to the 0.8% rise recorded the previous month. Two energy components, gasoline and natural gas, were responsible for most of the rise in the monthly index.
Average gasoline prices were up between March and April 2007 for a third month in a row. Although gasoline prices accounted for most of the increase in the monthly CPI, the 2.6% increase observed in April was relatively moderate, compared with the 12.5% rise posted in March. Given that stocks have declined since February and should normally increase in this period of the year to support summer growth in demand, motorists had to spend more to fill up.
Except for Ontario, where gasoline prices were down slightly (-0.2%), all other provinces posted increases ranging from 3.0% in Nova Scotia to 7.1% in British Columbia. For Ontario motorists, this slight decrease provided some respite after the substantial increases of the past two months.
Natural gas prices surged by 9.1% between March and April 2007. This was the strongest rate of growth posted by this energy component since January 2001. Monthly increases in the price of natural gas observed in Ontario (+11.8%) and Alberta (+14.3%) mainly drove the increase in the national index.
Costs of municipal water rose at their fastest pace in 15 months between March and April 2007. Metered and flat running water rates rose 3.8%, the fastest gain since January 2006. Water costs rose fastest in Alberta (+6.5%) and Ontario (+4.7%). Edmonton residents had to spend 17.4% more for running water in April than they did in March, while in Toronto, the increase was 10.0%.
The 2.4% increase in the price of automotive repairs and maintenance also exerted upward pressure on overall price levels.
Although it cost more to fill up the tank and to maintain a vehicle between March and April 2007, the 0.7% drop in the price of vehicle purchases and leases offset the upward pressure on the monthly index to some extent. Vehicle manufacturers continued to enhance the incentives offered to new vehicle purchasers, thus bringing down prices in relation to the previous month.
Lower prices for non-alcoholic beverages (-4.7%) and women’s clothing (-1.3%) also mitigated the monthly rise in prices in April.
The seasonally adjusted CPI climbed by 0.2% between March and April
Pushed up by almost all of the main components, the seasonally adjusted all-items index rose by 0.2% between March and April 2007. The increase in shelter costs (+0.7%) accounted for most of the seasonally adjusted monthly increase in consumer prices. To a lesser extent, the growth in prices for transportation (+ 0.8%), clothing and footwear (+2.2%), recreation, education and reading (+0.2%), household operations and furnishings (+0.2%) and food (+0.1%) contributed to the rise in the seasonally adjusted all-items index in April. The decline in the health and personal care index (-0.1%) attenuated the upward pressure exerted by the other components to a degree.
The seasonally adjusted core index as established by the Bank of Canada was up by 0.2% between March and April 2007.
Special aggregates
Core CPI published on behalf of the Bank of Canada
The core 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 rate of increase in the core index as established by the Bank of Canada was 2.5% in April 2007, up from the 2.3% rise observed the previous month. This represents the most rapid growth of the core index since March 2003.
On a monthly basis, this index was up by 0.2% in April 2007, less than the 0.3% rise recorded the previous month.
Energy
The energy products index rose only 0.1% in April 2007 over the same period of the previous year. The previous month, this index had increased by 4.5%. In April, it was the rise in electricity prices (+3.3%) that was the main factor behind this slight increase. Higher prices for fuel, parts and supplies for recreational vehicles (+2.5%) and for heating oil and other fuels (+0.1%) also pushed up this index. The upward pressure was almost totally offset by the drop in natural gas prices (-4.5%) and gasoline prices (-0.6%) observed between April 2006 and April 2007.
On a monthly basis, the energy index rose by 2.4% between March and April 2007, down from the 6.9% leap posted the previous month. The 2.6% increase in gasoline prices was largely responsible for the increase in the monthly energy index, like that for natural gas prices (+9.1%). The more modest price increases for heating oil and other fuels (+0.9%) and fuel, parts and supplies for recreational vehicles (+2.1%) also played a role in the positive trend in the energy index, but to a lesser extent. The national electricity index remained unchanged in April.
Goods and services
The goods index climbed 1.0% in April 2007 in relation to the same month the previous year, down from the 1.5% rise posted the previous month. Non-durable and semi-durable goods recorded increases this month, while durable goods posted decreases.
The 2.1% increase in prices for non-durable goods accounted for most of the rise in the goods index in April 2007 as compared with April 2006. Fresh vegetables (+12.9%), electricity (+3.3%), fresh fruits (+9.6%) and cigarettes (+2.6%) drove the upward pressure on the non-durable goods index.
Although to a lesser extent, the increase in average prices for semi-durable goods (+1.2%) also pushed up the goods index in light of increases in prices for women’s clothing (+3.2%) and men’s clothing (+1.5%).
Conversely, the 1.6% downturn in the durable goods index in April 2007 as compared with the same month last year mitigated the rise in the goods index. Most of the decrease can be attributed to prices for vehicle purchases (-1.1%), computer equipment and supplies (-18.7%) and video equipment (-8.4%).
On a monthly basis, the goods index was up by 0.4% in April 2007 after rising by 1.4% in March. The monthly indexes for semi-durable goods (+0.3%) and non-durable goods (+0.8%) rose between March and April, while that for durable goods (-0.5%) decreased slightly.
In April 2007, the services index climbed by 3.2% as compared with the same month the previous year. Increases in the indexes for mortgage interest cost (+5.6%) and homeowners’ replacement cost (+6.5%) contributed to most of the rise in the services index.
The monthly services index increased by 0.4% in April 2007 for a third consecutive month.
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