Highlights

Twelve-month percentage change in the CPI: +2.6%
Twelve-month percentage change in the CPI excluding energy: +2.2%

The Consumer Price Index (CPI) rose by 2.6% from June 2002 to June 2003, having registered monthly increases of only 0.1% in both May and June 2003. This 12-month change constitutes the weakest increase since September 2002. A large part of this rise came from the hike in the natural gas index (+48.3%), as well as from the 22.6% jump in automotive vehicle insurance premiums. Most of the increase in automotive vehicle insurance premiums occurred in earlier months, as they advanced by only 0.4% between May and June. The CPI excluding energy increased by 2.2% from June 2002 to June 2003.

The rise in cigarette prices, homeowners’ replacement cost and tuition fees were also significant factors in the increase in the All-items CPI. However, the decrease in prices for the purchase of automotive vehicles, clothing and traveller accommodation contributed to slow the increase.

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

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

For a second consecutive month, the CPI rose only slightly, increasing by 0.1% between May and June 2003. Upward pressure on the CPI came mainly from the increase in natural gas, traveller accommodation and gasoline prices, while the downward pressures were mainly due to the drop in the prices of automotive vehicle purchases and clothing.

The natural gas index rose by 8.6% in June under the influence of higher bills in Ontario and Alberta. The 8.7% price increase in Ontario is entirely due to the return to normal billing after the retroactive adjustments received by some consumers in May. The 21.1% jump in prices in Alberta is mainly due to an increase in recovery costs.

Traveller accommodation prices increased by 8.2%, after rising by 6.2% in May. These price increases are attributable to the onset of the peak tourist season across the country.

After posting important decreases in the two previous months, gasoline prices increased on average by 1.2% between May and June 2003. However, the price of gasoline fell in Prince Edward Island (-6.1%), Newfoundland and Labrador (-1.5%) and Manitoba (-0.4%).

The index for the purchase of automotive vehicles fell by 1.5% in June. According to the New Motor Vehicle Sales Survey, the sales in the first five months of 2003 were down 4.3% compared to the same period last year. Some manufacturers therefore decided to offer more substantial rebates in June.

The clothing index for men dropped by 5.1% in June, while the one for women’s clothing fell by 1.4%. These reductions are a result of widespread sales in most clothing categories. Price decreases for men’s clothing traditionally occur in June, but this year’s decline was more substantial than usual.

The seasonally adjusted CPI increased by 0.1% between May 2003 and June 2003

After correcting for seasonal influences, the All-items CPI rose by 0.1% between May and June 2003. The increase in the seasonally adjusted index for June is attributable to the rise in the shelter (+0.5%), food (+0.2%), and alcoholic beverages and tobacco products (+0.1%) indexes. These increases were partially offset by the decrease in the seasonally adjusted clothing and footwear (-1.9%), transportation (-0.3%) and health and personal care (-0.3%) indexes. The household operations and furnishings index, as well as the recreation, education and reading index were unchanged after seasonal adjustment.

Special aggregates

All-items excluding the 8 most volatile components (Bank of Canada definition)

The All-items index excluding the 8 most volatile components as defined by the Bank of Canada increased by 2.1% between June 2002 and June 2003. The main contributors to this increase were automotive vehicle insurance premiums (+22.6%), homeowners’ replacement cost (+5.9%) and tuition fees (+4.8%).

The All-items index excluding the 8 most volatile components as defined by the Bank of Canada decreased 0.1% between May and June. This decrease is explained mainly by the drop in the purchase price of automotive vehicles. The decline in clothing prices was also an important contributor.

Energy

In June 2003, energy prices were 7.9% higher than a year earlier. The majority of this increase is attributable to the rise in the price of natural gas (+48.3%). Higher prices for fuel oil (+10.5%), electricity (+1.5%) and gasoline (+0.8%) contributed to a lesser degree to the increase in the energy index.

Energy prices advanced by 1.9% from May to June 2003. This increase is largely due to the 8.6% rise in the natural gas index. Higher gasoline prices (+1.2%) also had an impact on the energy index.

Goods and services

From June 2002 to June 2003, the prices in the goods sector increased by 1.6%. The upward pressure came from the non-durable goods index (+4.3%), which was pushed up by the natural gas and cigarette indexes. Semi-durable goods prices fell by 2.8% compared to their June 2002 level, while the durable goods category posted a 1.2% decrease. Drops in the indexes for clothing and footwear accounted for almost the entire decline in the semi-durable goods index, while the purchase price of automotive vehicles explained most of the decrease for durable goods.

Once again, the service sector is the main cause of the upward pressure on the All-items index. Quasi-generalized price increases, led by automotive vehicle insurance premiums, pushed the service index up by 3.5% compared to June 2002.

Prices for the goods sector fell by 0.3% in June compared to May 2003. This decrease is due to the durable goods (-1.1%) and semi-durable goods (-2.2%) indexes, while the non-durable goods index increased by 0.6%.

From May to June 2003, the cost of services increased by 0.2% mainly because of the increase in traveller accommodation prices.