Highlights

Twelve-month percentage change in the CPI: +2.2%
Twelve-month percentage change in the CPI excluding energy: +1.8%

The price consumers paid for the goods and services contained in the Consumer Price Index (CPI) basket edged up 0.1% for the third consecutive month, contributing to lowering the 12-month percentage change between July 2002 and July 2003 to 2.2%. This is the smallest increase since July 2002. The CPI excluding energy increased by 1.8% from July 2002 to July 2003, after rising 2.2% in June.

The majority of the 12-month advance in the CPI was due to increases within the shelter and transportation components. Within shelter, upward pressure came from natural gas and homeowners’ replacement cost, while for transportation it came from higher automotive vehicle insurance premiums. Last September’s tuition fee increases along with higher prices for food purchased from restaurants and cigarettes also contributed to the 12-month increase. A large part of the upward movement in these categories occurred earlier in the 12-month period. In July 2003, natural gas prices were 55.8% higher than in July 2002. This reflects mainly the fact that the level of the index was unusually low last year due to the effects of a payment to Northern Alberta customers following the sale of a gas field.

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%

The CPI rose slightly between June and July 2003, increasing by 0.1% for the third consecutive month. Increases in gasoline, men’s clothing and air transportation prices were almost entirely offset by price decreases for automotive vehicle purchases and beef.

Gasoline prices increased on average by 1.9% between June and July. Gasoline prices were up in all provinces except Prince Edward Island (-0.1%), where prices are regulated. Price increases ranged from 0.2% in Alberta to 6.5% in Nova Scotia.

After dropping 5.1% in June, the index for men’s clothing rebounded by 3.4% as widespread sales came to an end. Price increases for men’s clothing normally occur in July, but like the downward movement last month, were more substantial than usual. For a third month this year, the overall clothing index has reached a level as low as those last seen in 1992.

Air transportation costs climbed by 3.1% from June to July 2003. Increases are typical in July reflecting in large part the peak season for travellers. The advance registered this year is, however, smaller than usual as July’s increases over the previous three years have averaged 9.0%.

Prices for the purchase of automotive vehicles were down by 0.9% in July, following a 1.5% decrease in June, primarily a result of additional incentives from automotive vehicle manufacturers. The index for the purchase of automotive vehicles is now at its lowest level since October 1997.

Beef prices fell by 5.0% in July. This was the largest monthly decrease since the mid-seventies. While there were seasonal specials, most of the downward pressure came from price decreases for cuts Canada normally produces for export. The price reductions were the result of trade restrictions on Canadian beef by the United States and other countries triggered by the May 20 discovery of a case of bovine spongiform encephalopathy (BSE) in Alberta. Price declines were greatest in Western Canada with Alberta beef prices falling by 16.4%.

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

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

Special aggregates

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

The All-items index excluding the eight most volatile components as defined by the Bank of Canada rose by 1.8% between July 2002 and July 2003, the smallest 12-month advance since January 2002. This follows a 12-month increase of 2.1% in June. The main contributors to July’s rise were higher automotive vehicle insurance premiums (+22.1%), homeowners’ replacement cost (+6.0%) and the increase in tuition fees (+4.8%) registered last September.

The All-items index excluding the eight most volatile components as defined by the Bank of Canada remained unchanged between June and July. In large part, drops in the purchase price for automotive vehicles were offset by price increases for men’s clothing and cablevision.

Energy

In July 2003, energy prices were 6.7% higher than a year earlier. The majority of this increase is attributable to the rise in the price of natural gas (+55.8%). Higher prices for fuel oil (+10.5%) also contributed to the increase, while lower prices for electricity (-2.6%) and gasoline (-0.1%) exerted some downward pressure.

Consumers paid 0.4% more for energy in July 2003 than in June 2003. Higher gasoline prices (+1.9%) were partly offset by lower prices for electricity (-0.9%) and natural gas (-0.9%).

Goods and Services

From July 2002 to July 2003, prices in the goods sector went up 1.0%, after posting a 12-month increase of 1.6% in June. The upward pressure came from the non-durable goods index (+3.4%), which was pushed up by the natural gas and cigarette indexes. Semi-durable goods prices fell by 3.0% compared to their July 2002 level. 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.

The service sector was the main cause of the upward pressure on the All-items index. Generalized price increases, led by automotive vehicle insurance premiums, pushed the service index up by 3.2% compared to July 2002.

Prices for the goods sector remained stable in July compared to June 2003. Price increases in the non-durable goods (+0.2%) and the semi-durable goods (+0.5%) were offset by price decreases for durable goods (-0.4%).

From June to July 2003, the cost of services increased by 0.2% mainly because of higher prices for air transportation and cablevision.