Highlights

In May 2005, consumers paid 1.6% more than in May 2004 for the goods and services included in the Consumer Price Index (CPI) basket, an increase lower than the 2.4% rise recorded in April. The 12-month change in the All-items excluding energy index, however, remained stable, rising 1.6% between May 2004 and May 2005.

Gasoline prices were the primary reason for the substantial decrease in the 12-month change in the All-items index between April and May. The 12-month change in gasoline prices went from an increase of 15.3% in April to a decrease of 1.6% in May. An increase in gasoline prices between April and May of last year (+13.6%) combined with a decrease this year (-3.1%) served to narrow the gap between the 2004 and 2005 April and May indexes.

Gasoline, Canada (1992=100)

The All-items index excluding the eight volatile components identified by the Bank of Canada rose by 1.6% between May 2004 and May 2005, a slight slowdown compared to the 1.7% increase recorded in April.

Between April and May, the All-items index increased by 0.1% after having risen by 0.3% between March and April. The deceleration in the change of the All-items index is attributable to the decrease in gasoline prices.

On a monthly basis, the All-items index excluding the eight volatile components identified by the Bank of Canada increased by 0.2% in May, after having remained unchanged in April.

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

In May, the CPI recorded a 1.6% increase compared to May 2004. Upward pressure was exerted primarily by homeowners’ replacement cost, restaurant meals, property taxes and fuel oil.

Moderating these increases were lower prices for computer equipment and supplies, gasoline, and traveller accommodation.

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

Homeowners’ replacement cost, which represents the worn out structural portion of housing and is estimated using new housing prices (excluding land), rose by 5.3% over May 2004, the most moderate increase since August 2002. All regions reported increases which ranged between 0.8% and 8.2%.

Consumers experienced a 2.8% increase in the price of restaurant meals between May 2004 and May 2005. This increase is within the 2.6% to 2.9% range observed for the 12-month change for the previous twelve months, except for the 3.1% increase in April.

The increase in property taxes (+4.3%) reflected in the CPI in October 2004 continued to be an important contributor to the 12-month rise in the All-items index.

Fuel oil prices jumped an average of 27.2% between May 2004 and May 2005, following a 31.6% increase in April. Increases were observed in all provinces, ranging from 18.7% in British Columbia to 41.5% in Prince Edward Island.

Exerting a moderating effect on the 12-month change of the all-items index, the index for computer equipment and supplies dropped by 23.7% compared to May 2004.

Gasoline prices were down 1.6% in May, the first decrease in the 12-month change since March 2004. At a level of 162.0, the May 2005 gasoline price index was below the level of 164.7 recorded for May 2004 (1992=100). The situation was not the same in all provinces, since Newfoundland and Labrador, Prince Edward Island, New Brunswick, Manitoba and British Columbia posted increases ranging from 2.2% to 12.2%.

Continuing the trend that started in June 2001, the index for traveller accommodation was down 6.9% compared to May 2004. All provinces recorded decreases having varied from 2.2% in Manitoba to 9.8% in Ontario, except for Saskatchewan, where a slight increase of 0.4% was recorded.

Prices in May 2005 were higher than the ones in May 2004 for six of the eight major components of the CPI. Shelter (+3.2%) and food (+3.3%) indexes exerted the strongest upward pressure. The downward pressure came from the recreation, education and reading index (-0.7%) and the clothing and footwear index (-0.5%).

Monthly percentage change in the CPI: +0.1 %
Monthly percentage change in the CPI excluding energy: +0.3 %

Between April and May, the CPI increased by 0.1%, from a level of 126.9 to 127.0 (1992=100). Higher prices for fresh fruit, the purchase and leasing of automotive vehicles, homeowners’ maintenance and repairs, and traveller accommodation were the main factors behind the increase. Lower gasoline prices offset most of the upward pressure.

Fresh fruit prices recorded a seasonal increase of 7.2% in May. All categories of fresh fruit showed increases, especially “other fresh fruit” (e.g. pears, grapefruit, grapes, cantaloupes and pineapple), where prices rose by 8.7% accounting for most of the fresh fruit rise.

Reductions in the financial incentives offered by some automobile manufacturers led to a monthly increase of 0.6% in prices for the purchase and leasing of automotive vehicles.

The index for homeowners’ maintenance and repairs posted a 2.4% increase in May. Quebec was the province with the highest increase, at 3.9%, followed closely by Alberta at 3.8%, while Newfoundland and Labrador, Prince Edward Island, New Brunswick and Manitoba posted decreases ranging from 0.1% to 1.4%.

With the advent of the summer season, prices for traveller accommodation were up by 5.8%, a small increase for the month of May. All regions came into the high tourist season, with increases ranging from 2.5% in Quebec to 12.6% in British Columbia.

For the first time since December 2004, gasoline prices were down 3.1% in May. All provinces posted decreases, ranging from 0.9% in New Brunswick to 4.7% in Saskatchewan, except Newfoundland and Labrador, and Prince Edward Island where increases of 0.6% and 4.2% were registered respectively.

The seasonally adjusted CPI down by 0.2% between April and May

Seasonally adjusted, the CPI was down by 0.2% between April and May 2005.

The indexes for transportation (-0.3%), recreation, education and reading (-0.2%), and health and personal care (-0.2%) exerted downward pressure on the seasonally adjusted All-items index.

Upward pressure came from the index for food (+0.3%), shelter (+0.2%), clothing and footwear (+0.5%), household operations and furnishings (+0.2%), and alcoholic beverages and tobacco products (+0.1%).

Special aggregates

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

From April to May 2005, the All-items index excluding the eight volatile components identified by the Bank of Canada increased by 0.2%. Higher prices for the purchase and leasing of automotive vehicles (+0.6%) and homeowner’s maintenance and repairs (+2.4%) were attenuated by the decrease in prices for non-alcoholic beverages (-2.7%) and women’s clothing (-1.2%).

Energy

The energy index rose 1.7% between May 2004 and May 2005, compared to the 12-month increase of 10.7% between April 2004 and April 2005. Gasoline prices were behind the slowdown in the 12-month change, falling 1.6% in May after increasing 15.3% in April 2005.

Higher prices for fuel oil (+27.2%), electricity (+3.1%), natural gas (+1.4%), as well as for fuel, parts and supplies for recreational vehicles (+1.0%) contributed to pushing up the energy index in May 2005.

On a monthly basis, the energy index decreased 1.9%, again mainly due to gasoline prices (-3.1%). Prices for natural gas (-1.7%), fuel oil (-1.9%) and fuel, parts and supplies for recreational vehicles (-1.4%) also exerted a mitigating effect on the index. Only electricity prices (+0.2%) exerted upward pressure..

Goods and services

Prices in the goods sector rose by 0.9% between May 2004 and May 2005.
This increase can be explained by a rise in prices for non-durable goods (+2.4%) since prices for durable goods (-1.5%) and semi-durable goods (-0.1%) were down.

In May, the strongest upward pressure on the index for non-durable goods came from fuel oil prices (+27.2%), cigarettes (+3.7%), electricity (+3.1%) and fresh vegetables (+9.0%). The effect of these price increases was moderated by lower prices for gasoline (-1.6%). The durable goods index was down 1.5%, largely as a result of lower prices for computer equipment and supplies (-23.7%).The 0.1% drop in the index for semi-durable goods is attributed mostly to lower prices for men’s clothing (-1.8%).

The services index increased by 2.2% from May of last year. Increases in homeowners’ replacement cost (+5.3%), restaurant meals (+2.8%) and property taxes (+4.3%) were the main factors behind this increase. Lower prices for traveller accommodation (-6.9%) accounted for most of the downward pressure exerted.

The goods index decreased 0.2% between April 2005 and May 2005. The increase in the index for durable goods (+0.3%) partially offset the decrease in the indexes for non-durable goods (-0.5%) and for semi-durable goods (-0.4%).

Between April 2005 and May 2005, the cost of services increased by 0.4%. An increase in prices for homeowners’ maintenance and repairs (+2.4%) and traveller accommodation (+5.8%) was the main reason behind this rise.