Twelve-month percentage change in the CPI: +1.0%

Twelve-month percentage change in the CPI excluding energy: +2.3%

Lower energy prices tempered the rise in the Consumer Price Index (CPI), limiting the increase to 1.0% from May 2001 to May 2002, the slowest advance since last December. This 12-month change is a sizeable drop from the 1.7% increase recorded in April 2002. A year ago, the CPI was up sharply between April 2001 and May 2001, pushed by energy prices. The gap between this year's index and last year's is therefore smaller. Excluding energy, the CPI would have increased by 2.3% between May 2001 and May 2002. This advance follows 12-month increases of 2.5% in March and 2.4% in April.

Energy prices, which were down 10.5% compared with May 2001, have exerted the greatest slowdown effect on the All-items CPI. Except for electricity, the prices of all items in the energy component have fallen. Apart from last November and December, a decrease of this size has not been seen since February 1987. The situation is mainly attributable to a 35.3% drop in natural gas prices and a 10.8% decline in gasoline prices.

In contrast with energy prices, the prices of food, cigarettes and automotive vehicle insurance premiums were the main source of upward pressure on the All-items CPI. Food prices rose 2.1% from May 2001 to May 2002, owing primarily to the prices of restaurant meals. Despite the influence of food prices on the All-items CPI, May's increase represented a slow-down compared with the previous seventeen months, a period in which the 12-month rate of change of the food index varied between 3.2% and 5.2%. Cigarette prices were 22.7% higher than at the same time last year, and automotive vehicle insurance premiums were 11.3% higher.

Higher electricity prices and, to a lesser extent, higher air transportation prices and rents also contributed to the 12-month rise recorded in May. Apart from the drop in energy prices already noted, a decrease in the cost of mortgage interest also had a moderating effect on the CPI increase.

Monthly percentage change in the CPI: 0.2%

After monthly increases which varied between 0.6% and 0.7% over the past three months, the CPI advanced more slowly, rising only 0.2% between April and May 2002. This was the smallest monthly change since the start of the year. Upward price pressure on the CPI came mainly from traveller accommodation and cigarettes, while downward price pressure was largely induced by lower prices for fresh vegetables and gasoline.

From April to May 2002, the prices of traveller accommodation advanced 10.7%. This increase may be explained by the introduction of high-season rates in some hotels, along with increased demand during the May long weekend. Even so, prices in this sector were down an average of 5.3% from May 2001, this represented the twelfth consecutive 12-month decrease.

Overall, cigarette prices in Canada advanced 2.8% from April to May 2002. This increase in prices was due in part to higher retail prices and in part to the lingering effect of sales tax increases that came into effect in April in Nova Scotia and Manitoba.

Prices of fresh vegetables continued to fall in May 2002 (-7.3%) due to an increase in supply. Prices, however, remained 3.4% higher than their level of May 2001.

Gasoline prices fell 1.8% from April to May. Part of this price movement may be explained by weak world demand along with a relatively low price per barrel of oil. The decreases varied from 0.3% in Yellowknife to 3.0% in Ontario, while increases were recorded in Prince Edward Island (+8.1%), Whitehorse (+4.6%), Newfoundland and Labrador (+4.0%) and British Columbia (+1.9%).

The seasonally adjusted CPI declined by 0.2% between April 2002 and May 2002

After adjusting for seasonal influences, the All-items CPI declined 0.2% between April and May 2002. The drop in the seasonally adjusted index for May is attributable to declines in the indexes for Transportation (-0.5%), Food (-0.5%) and Clothing and footwear (-0.4%). These decreases were partially offset by increases in the seasonally adjusted indexes for Alcoholic beverages and tobacco products (+0.9%), Recreation, education and reading (+0.2%) and Health and personal care (+0.1%). The indexes for both Shelter and Household operations and furnishings remained unchanged.

Special Aggregates

Energy

In May 2002, energy prices were down 10.5% from their level of a year earlier. While this decrease is due to lower prices for every item except electricity, the lion's share is attributable to the prices of natural gas (-35.3%) and gasoline (-10.8%).

Energy prices fell 0.8% from April to May 2002. This slight decrease is almost entirely attributable to the 1.8% drop in gasoline prices, which was partially offset by a 1.0% rise in natural gas prices.

Goods and Services

From May 2001 to May 2002, prices in the goods sector fell 0.8%, reflecting a fairly broad-based decline. The largest impact is attributable to the non-durable goods index (-1.1%), as higher cigarette prices only partially offset lower gasoline and natural gas prices. The prices of durable goods were down 0.4% from their level in May 2001, while the semi-durable goods category showed no change.

Whereas the slow-down effect on prices was concentrated in the goods sector, most of the upward pressure on the All-items index came from the services sector. Fairly widespread price increases caused the services index to climb 2.9% compared with May 2001.

Prices for the goods category declined 0.3% in May compared with April 2002. The semi-durable goods index showed the largest drop, 1.6%, reflecting a widespread decline in clothing prices. Prices in the non-durable goods category fell 0.3% from April to May 2002, with fresh vegetables and gasoline prices pushing the index down. Higher cigarette prices partially offset that effect. The durable goods index rose 0.2%, mostly owing to higher prices for the purchases of recreational vehicles.

From April to May 2002, the cost of services rose 0.7%, mainly because of higher prices for traveller accommodation.