Twelve-month percentage change in the CPI: +1.3%

Twelve-month percentage change in the CPI excluding energy: +2.6%

Between June 2001 and June 2002, the Consumer Price Index (CPI) advanced 1.3%, after rising 1.0% between May 2001 and May 2002. However, these changes are down from the 12-month increases recorded from February to April 2002, which ranged between 1.5% and 1.8%. Just over half of the CPI's advance in June is due to a rise in cigarette prices, largely resulting from an increase in taxes. Excluding energy, the CPI would have increased 2.6% between June 2001 and June 2002.

Energy prices, which were 10.4% lower than in June 2001, exerted an important dampening effect on the All-items CPI. Except for electricity (+2.8%), the prices of all the items in the energy component were lower. Once again, much of June's decrease is attributable to a drop in the prices of natural gas (-36.5%) and gasoline (-7.6%).

Apart from the drop in energy prices, a decrease in the cost of mortgage interest also had a moderating effect on the CPI increase.

Cigarette prices, which were 32.1% higher than in June 2001, exerted the greatest upward pressure on the All-items CPI. This advance was mainly attributable to provincial and federal tax increases in November 2001 and since February 2002.

Food prices, automobile insurance premiums and homeowners' replacement cost also exerted upward pressure on the All-items CPI. Food prices rose 2.4% from June 2001 to June 2002, owing mainly to the prices of restaurant meals as well as potato prices. The May and June advances in the 12-month rate of change in the food index are much lower than those of the previous 17 months (between +3.2% and +5.2%). Automobile insurance premiums were 11.9% higher than the same time last year, while the homeowners' replacement cost was 5.2% higher.

Monthly percentage change in the CPI: +0.3%

For a second consecutive month, the CPI continued its modest advance, rising only 0.3% between May and June 2002, after registering larger monthly increases in February, March and April (between +0.6% and +0.7%). Upward pressures on the CPI came mainly from increases in cigarette taxes and a rise in the prices of traveller accommodation and potatoes, while downward pressures came mainly from a drop in electricity and gasoline prices.

Overall, cigarette prices in Canada advanced 7.9% from May to June 2002. Quebec, Ontario and New Brunswick raised their provincial cigarette tax by $5 per carton effective June 18. Also on the same date, the federal excise tax was increased by $3.50 per carton in all provinces.

The prices of traveller accommodation rose 4.2%, after increasing by 10.7% in May. These price increases are attributable to the arrival of the high season for tourism.

Potato prices jumped 16.0% in June. It is not unusual to see an increase of this size in June, since at this time of the year, inventories from the previous fall run low and new potatoes are not yet on the market.

A 1.8% decrease in the electricity index for Canada is entirely attributable to a 5.0% drop in prices in Ontario. That drop reflects changes resulting from the opening of the Ontario market to independent distributors, which took place on May 1, 2002. Under the new system, customers have the option of purchasing their electricity at the average monthly market price for a given month or signing a fixed-price contract with a retailer for a period of one, three or five years. The new electricity rates (market price and fixed contract) came into effect only after meters were read. Since most meters were not read until June, rate changes are reflected in the June index rather than the May index.

Decreases in gasoline prices in Eastern and Central Canada, partly neutralised by increases in the West, brought the Canada index down by 0.9% from May to June.

The seasonally adjusted CPI increased by 0.2% between May 2002 and June 2002

After removing seasonal influences, the All-items CPI rose by 0.2% between May 2002 and June 2002. The contributors to the rise in June's seasonally adjusted index were increases in the indexes for Alcoholic beverages and tobacco products (+4.3%), Health and personal care (+0.3%), Food (+0.1%), Household operations and furnishings (+0.1%), as well as Recreation, education and reading (+0.1%). Partly offsetting these increases were declines in the seasonally adjusted indexes for Transportation (-0.2%), Shelter (-0.1%), and Clothing and footwear (-0.1%).

Special Aggregates

Energy

In June 2002, energy prices were down 10.4% from their level of a year earlier. The lion's share of this decrease is attributable to lower prices for natural gas (-36.5%) and gasoline (-7.6%). Fuel oil prices were down 10.0% from their level of June 2001, while electricity prices were up 2.8%.

Energy prices fell 1.1% from May to June 2002. This decrease was largely due to a 1.8% decline in electricity prices, resulting from the opening of the Ontario market to competition. A drop in gasoline prices (-0.9%) also had a significant effect on the index, while a decline in natural gas prices (-1.0%) only slightly contributed to this decrease.

Goods and Services

From June 2001 to June 2002, prices in the goods sector fell 0.2%. The largest impact is attributable to the non-durable goods index (-0.3%), pushed down by a decrease in natural gas and gasoline prices. The prices of durable goods were down 0.4% from their level in June 2001, while the semi-durable goods category registered a 0.4% increase. Reductions in the prices of computer equipment and supplies and new vehicles explained much of the decline in the durable goods index, while the prices of reading material and other printed matter explained a large part of the increase for semi-durables.

Once again, the upward pressure on the All-items index came mainly from the services sector. Fairly widespread price increases, led by automobile insurance premiums, caused the services index to climb 2.8% compared with June 2001.

Prices in the goods category advanced 0.3% in June compared with May 2002. This increase is attributable to the non-durable goods index, which advanced 0.5%. Higher cigarette taxes are largely responsible for this increase. Prices in the semi-durable and durable goods category declined 0.1%.

From May to June 2002, the cost of services rose 0.2%, mainly because of an increase in the prices of traveller accommodation. The advance in the prices of services was somewhat slower than last month's rise (+0.7%).