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62-001-XIB Consumer Price Index October 2005 |
HighlightsConsumer prices eased off on average in October as the price of gasoline fell from all-time highs in September. The all-items Consumer Price Index declined 0.5% from September, the fastest monthly decrease since April 2003. Prices at the pump were also the main factor in the 12-month change in the all-items index. Consumers in October this year paid 2.6% more than they did in October 2004 for goods and services, compared to 3.4% in September. Gasoline prices in recent months have apparently not yet had a major impact on other consumer prices. The all-items index, excluding energy, was 1.5% higher in October this year compared to a year earlier, a slightly slower pace than the September index. Gasoline prices were 17.0% higher than they were in October last year. In contrast, in September, gasoline prices were 34.7% higher than they were a year earlier. Gasoline, Canada (1992=100)
The All-items index excluding the eight volatile components as defined by the Bank of Canada remained unchanged in October. The 12-month change was also stable at 1.7%. Twelve-month percentage change in the CPI: +2.6%
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How can the price of natural gas in Alberta be explained? Natural gas prices in Canada are negotiated between the purchaser and the producer and are not regulated. However, the rates that consumers pay to distributors must be approved at the provincial level. Alberta has adopted a policy that requires that distributors base their rates on market prices, with no option to store natural gas purchased at a lower price. In Ontario, for example, distributors store millions of cubic metres of gas in underground caverns during the summer when the price is generally lower. However, the Alberta government offers rebates to consumers between the months of November and March when the natural gas price exceeds $5.50 per gigajoule. |
Homeowners’ replacement cost, which represents the worn out structural portion of housing and is estimated using new housing prices (excluding land), rose by 4.7% over October 2004. The main factors in this increase were higher costs for labour and the transportation of materials.
Fuel oil prices have climbed 29.0% since last year. Higher world prices for crude oil in the past year pushed up prices. Price increases varied from 25.1% in Quebec to 47.0% in Yellowknife.
Most of the major components of the CPI posted 12-month increases. The clothing and footwear component (-0.9%) was down as a result of lower prices for women’s and men’s clothing. There was a slight decrease in the recreation, education and reading (-0.4%) component due to lower prices for computer equipment and supplies. The transportation (+6.0%), housing (+3.4%) and food (+1.9%) indices exerted the strongest upward pressure on the All-items index. To a lesser degree, the indices for alcoholic beverages and tobacco products (+2.4%), health and personal care (+1.8%) and household spending and equipment (+0.6%) also contributed to the increase.
The All-items CPI fell 0.5% in October mostly under the influence of gasoline prices. This was the most significant decrease since the index fell 0.7% in April 2003 when the lower gasoline prices reduced the index. Lower prices for traveller accommodation, arising from the introduction of off-season rates, was the second strongest contributor to the monthly drop in the index. Women’s clothing also played a moderating role. The decline in the index was slowed by higher prices for the purchase and leasing of automotive vehicles and higher property taxes. The CPI excluding energy remained stable from September to October.
Gasoline prices fell an average of 8.9% from September to October, the result of lower wholesale prices and lower crude oil prices on the world market. Lower prices were experienced through Canada, with the exception of Iqualuit where gasoline prices remained generally stable. The largest decline in prices was reported in Ontario (-10.0%), while prices in Yellowknife fell only 1.0%.
Hotels normally slowly lower their prices in the fall. The drop of 9.2% in prices from September to October 2005 matches that for the same period last year. The largest reduction in rates (-12.0%) was noted in October 2001 following the events of September 11. The decline in prices over the past few years can be attributed to reduced demand resulting from fewer American visitors, mainly in the major urban centres. Rates in October 2005 were 4.2% lower than their level a year ago. The 12-month change in the index has been negative since June 2001.
Consumers took advantage of numerous discount sales in the women’s clothing sector in October. Prices for women’s clothing were down 3.9%. Reductions of this nature normally occur in November. This month-over-month drop was the highest recorded for an October since this introduction of this series in 1982. Quebec posted the largest decrease (-6.7%), while prices in Prince Edward Island (+1.6%) rose slightly.
Prices for purchasing or leasing an automotive vehicle were up 0.6% in October. Less generous financial incentives from manufacturers pushed up the index.
Changes in property taxes (including special fees) are reflected in the CPI once a year, in October. This year, property taxes were up 3.2%. This is the second largest increase since 1992. The biggest jump in rates was recorded in New Brunswick (+7.3%), while rate reductions were noted in Manitoba (-0.7%). The residents in British Columbia (+6.3%), Nova Scotia (+5.2%), Prince Edward Island (+4.3%), Alberta (+3.5%), Ontario (+3.2%), Quebec (+2.0) and Newfoundland-Labrador (+0.6%) all experienced increased taxes. Saskatchewan (-0.2%) residents enjoyed lower taxes.
Seasonally adjusted, the CPI was down 0.3% between September and October 2005.
Downward pressure came from the indexes for transportation (-2.4%), clothing and footwear (-1.0%), household operations and furnishings (-0.2%), recreation, leisure and reading (-0.1%).
The indexes for shelter (+0.6%), food (+0.3%), health and personal care (+0.1%) exerted an upward pressure on the seasonally adjusted All-items index.
The seasonally adjusted index for alcohol and tobacco remained unchanged.
All-items index excluding the eight most volatile components (Bank of Canada definition)
The All-items index excluding the eight volatile components as defined by the Bank of Canada rose by 1.7% between October 2004 and October 2005. The main contributors to this increase were prices for the purchase and leasing of automotive vehicles (+3.8%), homeowners’ replacement cost (+4.7%), restaurant meals (+3.3%), and property taxes (+3.2%). The increase was offset by lower prices for computer equipment and supplies (-16.6%), sports and athletic equipment (-8.8%) and women’s clothing (-2.3%).
Between September 2005 and October 2005, the All-items index excluding the eight volatile components identified by the Bank of Canada remained stable. The main factor behind the upward pressure was the rise in property taxes (+3.2%), while most of the downward pressure was due to a decrease in prices for traveller accommodation (-9.2%).
Higher gasoline prices (+17.0%) were the main contributor to this increase, although the prices for natural gas (+19.2%), fuel oil (+29.0 %), electricity (+2.6%), and recreational vehicle parts and supplies (+10.5%) were also factors.
On a monthly basis, the energy index was down 4.6% largely under the influence of prices for gasoline (-8.9%) as well as recreational vehicle parts and supplies (-4.4 %). The decline was moderated by higher prices for natural gas (+1.8%), fuel oil (+2.9%) and electricity (+0.2%).
Almost all of this increase can be accounted for by the rise in prices for non-durable goods (+5.2%), while prices for semi-durable goods decreased slightly (-1.1%) and those for durable goods increased slightly (+0.6%).
In October, the strongest upward pressure on the index for non-durable goods came from prices for gasoline (+17.0%), natural gas (+19.2%), fuel oil (+29.0%), cigarettes (+3.1%) and electricity (+2.6%). The effect of these price increases was partly offset by lower prices for fresh fruits (-6.0%), toiletries and cosmetics (-1.3%) and pork
The index for semi-durable goods was down slightly, mainly because of the decrease in prices for women’s clothing (-2.3%) and men’s clothing (-1.9%). These decreases were moderated by higher prices for newspapers (+3.9%) and for magazines and periodicals (+4.8%).
The index for durable goods was up slightly. The increase in prices for the purchase of automotive vehicles (+3.8%) was moderated by lower prices for computer equipment and supplies (-16.6%) and sport and athletic equipment (-8.8%).
The services index increased 2.1% over October last year. Increases in homeowners’ replacement cost (+4.7%), restaurant meals (+3.3%) and property taxes (+3.2%) were the main contributors to this rise. The strongest downward pressure came from lower prices for traveller accommodation (-4.2%) and insurance premiums for automotive vehicles (-0.8%).
The goods index was down 1.1% between September 2005 and October 2005. The index for non-durable goods decreased 1.5% and that for semi-durable goods fell 0.9%, while the index for durable goods fell slightly by 0.5%.
Between September 2005 and October 2005, the cost of services rose 0.2%. Property taxes (+3.2%) exerted the most upward pressure, while most of the downward pressure was due to lower costs for traveller accommodation (-9.2%).
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