Highlights

In July 2004, Canadian consumers paid 2.3% more than they did in July 2003 for the goods and services included in the Consumer Price Index (CPI) basket. However, the 12-month increase in the All-items excluding energy index was identical to June’s at 1.6%.

Gasoline prices were again by far the main contributor to the rise in the CPI. However, the 12-month increase in gasoline prices slowed from 24.5% in June to 17.9% in July. This slowdown impacted the 12-month change in the All-items index, which fell from 2.5% in June to 2.3% in July.

The All-items index excluding the eight volatile components identified by the Bank of Canada rose by 1.9% from July 2003 to July 2004. This follows a 1.7% rise in June.

Between June and July, the CPI fell by 0.1% mainly as a result of the 3.5% decline in gasoline prices. Gasoline prices have fallen by 6.7% in the last two months after rising 29.4% in the previous five months.

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

Adjustments to CPI basket weights effective this month

Statistics Canada has determined that the weights assigned to "mortgage interest cost" were too high in the CPI basket update effective January 2003. The effect on the Canada All-items CPI has been very small, within the rounding factor of the index.

Effective with this release, the weight for "mortgage interest cost" has been reduced and as a result, the weights of all other commodities have increased proportionally. The adjusted CPI basket weights are in this publication, as well as in the Documentation section at /imdb-bmdi/2301-eng.htm.

For more information, contact Rebecca McDougall (1-866-230-2248; 613-951-9606; fax: 613-951-1539), Prices Division.

Twelve-month percentage change in the CPI: +2.3%
Twelve-month percentage change in the CPI excluding energy: +1.6%

In July, the CPI registered a slightly smaller 12-month increase than in the previous two months, increasing 2.3% compared to 2.5% in May and June. While higher gasoline prices were by far the main contributor to the 12-month increase in the CPI, upward pressure was also exerted by homeowners’ replacement cost, cigarettes, homeowners’ insurance premiums, tuition fees and restaurant meals.

Dampening these increases were lower prices for fresh vegetables, computer equipment and supplies and leasing of automotive vehicles.

Gasoline prices were up 17.9% from July 2003. Substantial price increases were observed in all provinces, with the highest in Prince Edward Island (+28.1%) and the lowest in Saskatchewan (+15.1%).

Homeowners’ replacement cost, which represents the worn out structural portion of housing and is estimated using new housing prices (excluding land), rose 7.1% from July 2003. Favourable market conditions and higher material and labour costs across Canada are the main factors behind this increase.

Increases in tobacco taxes in the last 12 months explain most of the 7.5% rise in the price of cigarettes since July 2003.

Homeowners’ insurance premiums were up 13.3% on average.

The 8.1% increase in tuition fees continues to impact the 12-month increase in the CPI, although they are collected only once a year, in September.

Restaurant meal prices rose 2.6%. This increase combined with the 6.9% increase in meat prices contributed to push the food index upward by 1.9% from July 2003. Increases in meat prices ranged from 1.9% for “other poultry” to 10.8% for pork.

However, prices for fresh vegetables dampened these increases, falling 11.7% from July 2003 to July 2004. This decline is due mostly to better crops than last year in all categories of vegetables, especially for lettuce (-24.7%) and “other fresh vegetables” (-11.5%).

Computer equipment and supplies prices fell 15.3% as prices for desktops and laptops decreased.

Prices for the leasing of automotive vehicles fell 5.4% as a result of financing incentives offered over the last 12 months.

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

The CPI fell 0.1% from June to July. Downward pressure came mostly from lower prices for gasoline. Weaker prices for fresh vegetables and women’s footwear also contributed to this decrease, although to a lesser degree. Higher traveller accommodation prices exerted a slight dampening effect on these downward pressures.

Gasoline prices fell for a second consecutive month after increasing in the previous five months. Prices fell 3.5% in Canada from June to July 2004, with all provinces and territories posting price decreases. Prices fell the most in Alberta, declining 8.6%, while Ontario residents experienced the smallest decrease at only 1.6%.

Consumers can now take advantage of domestic produce and therefore experienced a 5.8% decline in fresh vegetable prices in July 2004. Lower prices for “other fresh vegetables”, tomatoes and lettuce contributed to this decrease. Higher prices for new potatoes, which are imported from the United States since new domestic crops are not yet available, dampened these decreases.

Women’s footwear prices fell 5.7%, due mostly to end-of-season specials.

In July, consumers paid 4.7% more for traveller accommodation than in June. This follows a 6.0% rise in June. July’s increases ranged from 0.4% for residents of Newfoundland and Labrador to 7.5% for Quebec residents. These increases are again attributable to the peak tourist season across the country.

The seasonally adjusted CPI remained steady from June to July 2004

After seasonal adjustment, the CPI remained unchanged from June to July 2004.

Upward pressure was exerted by higher seasonally adjusted indexes for shelter (+0.2%), health and personal care (+0.3%), food (+0.1%) and alcoholic beverages and tobacco products (+0.1%).

Counterbalancing these increases were lower seasonally adjusted indexes for transportation (-0.6%), clothing and footwear (-1.6%), and household operations and furnishings (-0.1%). There was no change in the seasonally adjusted index for recreation, education and reading.

Special aggregates

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

The All-items index excluding the eight volatile components identified by the Bank of Canada increased 1.9% from July 2003 to July 2004. The main contributors to this increase were homeowners’ replacement cost (+7.1%), homeowners’ insurance premiums (+13.3%), tuition fees (+8.1%) and electricity (+4.6%).

From June to July 2004, the All-items index excluding the eight volatile components identified by the Bank of Canada registered an increase of 0.2%. Price increases for traveller accommodation (+4.7%), homeowners’ replacement cost (+0.7%) and electricity (+0.7%) exerted upward pressure on the index, which was partially offset by lower prices for clothing (-1.0%) and women’s footwear (-5.7%).

Energy

The energy index rose 10.7% from July 2003 to July 2004, due mostly to gasoline prices, which rose 17.9% in this period. Higher prices for electricity (+4.6%), fuel oil (+10.7%) and for fuel, parts and supplies for recreational vehicles (+10.5%) also contributed to the increase. However, natural gas prices fell 0.3% from 12 months ago.

On a monthly basis, the energy index decreased 1.6%, forced down by lower prices for gasoline (-3.5%), fuel, parts and supplies for recreational vehicles (-1.8%) and natural gas (-0.2%). This decrease was dampened by price increases in electricity (+0.7%).

Goods and services

Prices in the goods sector rose by 2.3% from July 2003 to July 2004, down from the 2.7% advance registered in June. Gasoline prices were again the main factor of July’s increase with a 12-month advance of 17.9%, largely contributing to push the non-durable index up by 4.6%. However, durable goods prices fell on average 1.1%, with the prices for computer equipment and supplies (-15.3%) being the main contributor. The semi-durable goods index also exerted downward pressure, falling 0.7%, mostly due to lower prices for women’s clothing (-1.5%), toys, games and hobby supplies (-3.2%), athletic footwear (-4.5%) and kitchen utensils (-10.0%). These decreases were partially counterbalanced by higher prices for bedding and other household textiles (+4.6%), newspapers (+3.3%) and magazines and periodicals (+5.1%).

The services index rose 2.4% from July of last year. Higher homeowners’ replacement cost (+7.1%), homeowners’ insurance premiums (+13.3%) and tuition fees (+8.1%) were the key factors in this increase. These effects were somewhat offset by lower prices for leasing of automotive vehicles (-5.4%) and traveller accommodation (-3.7%).

Decreases in the non-durable (-0.5%), semi-durable (-0.9%) and durable (-0.1%) goods indexes led to a 0.4% decline in the goods index between June and July 2004. Lower prices for gasoline, women’s footwear and “other furnishings” were the main factors of the decrease in, respectively, the non-durable, semi-durable and durable goods indexes.

From June to July 2004, the cost of services increased 0.3% on average. A large part of this increase came from higher traveller accommodation prices and homeowners’ replacement costs.