Twelve-month percentage change in the CPI: +2.1%

Twelve-month percentage change in the CPI excluding energy: +2.8%

Prices for the goods and services included in the Consumer Price Index (CPI) rose 2.1% from July 2001 to July 2002. This increase constitutes an advance compared to June's 12-month increase of 1.3%. While lower energy prices played a large part in dampening the 12-month increase in the All-items index in both June and July, the slowdown effect was far less important in July. The CPI excluding energy climbed by 2.8% since July 2001, a change only slightly higher to that measured in June (+2.6%).

Between July 2001 and July 2002, energy prices fell by 3.1%, while the 12-month drop recorded in June was 10.4%. This change is mostly due to a turnaround in the 12-month comparison of gasoline prices. While a 7.6% drop in gasoline prices was measured between June 2001 and June 2002, an increase of 5.0% was recorded between July 2001 and July 2002. However in July, as was the case in June, the drop in natural gas prices (-34.6%) was the main factor contributing to the decline in the energy index. Fuel oil prices dropped 10.0%, while electricity prices increased by 5.9%.

In addition to the fall in natural gas and fuel oil prices, a decrease in the cost of mortgage interest also had a moderating effect on the increase in the CPI.

Once again, cigarette prices, which jumped by 42.0% as compared with July 2001, exerted the strongest upward pressure on the All-items CPI. The rise can largely be attributed to increases in provincial and federal taxes in recent months.

In addition to cigarettes, gasoline and electricity, which have already been mentioned, automotive vehicle insurance premiums and prices for food purchased from restaurants also exerted upward pressure on the All-items CPI.

Monthly percentage change in the CPI: +0.5%

Following monthly increases of 0.2% and 0.3% in May and June, the CPI rose by 0.5% in July compared to June 2002. The rise in July can largely be explained by increases in cigarette taxes and by higher prices for gasoline, electricity, air transportation and traveller accommodation. Downward pressure was primarily caused by a drop in prices for the purchase of new automotive vehicles and natural gas.

Overall, cigarette prices in Canada rose by 7.5% from June to July 2002. The increase reflects higher federal and provincial taxes introduced in mid-June as well as an increase imposed by the Yukon government on July 1st.

In July consumers paid 2.8% more for gasoline than in June 2002, a reversal from the falling prices of the previous two months. Price increases ranged from 0.3% in Yellowknife and Whitehorse to 4.7% in Quebec, while prices were down in Prince Edward Island (-1.1%) and Newfoundland (-0.2%) where prices are regulated by the provincial government.

Prices for traveller accommodation rose by 6.8%. Increases of such magnitude are common in July. New Brunswick residents experienced the highest increase (+11.0%).

The 3.2% rise in the electricity index for Canada can be attributed almost entirely to the 9.2% increase in prices in Ontario. This increase reflects the price changes on the free market, while contract prices remained fixed. The rising demand in July, resulting from heat waves, led to an increase in market prices. It should be noted that under the new system, customers have the option of purchasing their electricity at the average monthly market price or of signing a fixed-price contract with a retailer for a period of one, three or five years.

The cost of air transportation climbed by 8.4% from June to July 2002. Domestic, transatlantic and transpacific flights had the most marked effect on the index, reflecting in large part the peak season for travellers.

As a result of lower wholesale prices, natural gas prices dropped 5.7% from June to July. The major portion of this decline can be accounted for by decreases of 7.2% in Ontario and 17.4% in Alberta. The drop was less pronounced in Quebec (-2.9%), while no movements were recorded in Manitoba, Saskatchewan and British Columbia.

Prices for the purchase of new automotive vehicles were down by 1.2% in July, primarily as a result of manufacturer's rebates and discounts offered by dealers on some models. These incentives were offered partly to reduce stocks in preparation for the arrival of the 2003 models in the fall.

The seasonally adjusted CPI increased by 0.6% between June 2002 and July 2002

After removing seasonal influences, the All-items CPI increased by 0.6% from June to July 2002. This rise reflected increases in the indexes for Alcoholic beverages and tobacco products (+4.3%), Transportation (+1.4%), Shelter (+0.2%), Recreation, education and reading (+0.2%), Household operations and furnishings (+0.2%), Clothing and footwear (+0.1%) and Food (+0.1%). Health and personal care (-0.1%) was the only category that offset those effects, although minimally.

Special Aggregates

Energy

Energy prices were down 3.1% in July 2002 as compared with July 2001, mainly as a result of a drop in prices for natural gas (-34.6%) and fuel oil (-10.0%). However, gasoline prices were up 5.0% from July 2001, while electricity prices were higher by 5.9%.

After a 1.1% fall in June, the energy index rose by 1.6% between June and July 2002. Only natural gas prices were down (-5.7%) whereas all other components were up. Gasoline prices were up 2.8%, while there was a 3.2% increase in the electricity index brought about by higher prices in Ontario.

Goods and services

Prices for Goods rose by 1.6% from July 2001 to July 2002. Non-durable goods accounted for most of that increase, posting a 2.5% increase since July 2001. Higher prices for cigarettes, gasoline and electricity pushed up the index for non-durable goods, while the decrease in natural gas prices counterbalanced that increase to some extent. In the semi-durable goods category, the bulk of the 0.3% increase came from prices for reading material and other printed matter, while prices for women's clothing had a dampening effect on the increase. The index for durable goods was up 0.1% pushed by the increases in prices for automotive vehicle parts and equipment and for the purchase of recreational vehicles. Purchase prices for new automotive vehicles and for computer equipment and supplies served to moderate that upward trend.

In the Services sector, prices climbed by 2.7% from July 2001 to July 2002 as a result of widespread increases. Mortgage interest cost and traveller accommodation were the only two components that moderated the increase in the index.

Prices for Goods rose by 0.6% between June and July 2002. This rise reflects price increases in categories of non-durable and semi-durable goods. Prices for non-durable goods were pushed up 1.0% by higher prices for cigarettes, gasoline and electricity. The index for semi-durable goods was up by 0.7%, mainly as a result of price increases on women's clothing. Prices for durable goods fell by 0.4%, essentially because of a decrease in the purchase price for new automotive vehicles.

From June to July 2002, the cost of services rose 0.6%, mostly as a result of increases in the cost of air transportation and traveller accommodation.