Highlights

Energy prices continued to temper the 12-month rise in the Consumer Price Index (CPI).

Prices for the goods and services included in the Consumer Price Index (CPI) basket were on average 1.6% higher than in November 2002. This matches the 12-month increase of October, the smallest since the 1.3% increase registered in June 2002.

The 12-month increase remained at 1.6% as energy prices continued to fall. If energy had been excluded from the CPI, the 12-month change in November would have been 1.8%, a slight slowdown from the 1.9% registered in September and October.

The All-items index excluding the eight most volatile components, as defined by the Bank of Canada, rose 1.8% from November 2002 to November 2003, as was the case in October.

On a monthly basis, the CPI advanced 0.2%, after declining 0.2% in October. Higher prices for automotive vehicles exerted the strongest upward pressure on the index.

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

Twelve-month percentage change in the CPI: +1.6%
Twelve-month percentage change in the CPI excluding energy: +1.8%

Significant factors contributing to the 1.6% increase in the CPI included automotive vehicle insurance premiums, natural gas prices, tuition fees, homeowners’ replacement cost and homeowners’ insurance premiums.

Lower prices for gasoline, automotive vehicles, electricity and traveller accommodation exerted some downward pressure on the 12-month increase in the CPI.

Automotive vehicle insurance premiums increased on average 15.4% from November 2002 to November 2003. This was the smallest 12-month increase since July 2002.

Natural gas prices jumped 20.9%, with most of the price advances occurring in the first half of the 12-month period. Increases ranged from 3.9% in Alberta to 32.5% in Ontario.

Tuition fees, represented by university fees, rose 8.1%.

Homeowners’ replacement cost, which represents the expenditures necessary to compensate for house depreciation and is estimated using new housing prices (excluding land), was up 6.1%. Low interest rates in recent years have attracted buyers into the housing market, sending house prices in Canada on a strong upward trend.

Premiums for homeowners’ insurance were up 13.6%.

Gasoline prices were 4.2% lower than in November 2002, on average in Canada. The strongest price decline occurred in Alberta (-9.9%).

Although automotive vehicle prices rebounded significantly on a monthly basis, the index remains 1.6% lower than its November 2002 level.

The electricity index fell 4.6% from November 2002 to November 2003. This decline is almost entirely due to regulated prices in November 2003 being compared to non-regulated prices in November 2002 in Ontario.

Traveller accommodation prices fell 8.8% from November 2002. Prices in this industry have been trending down for two and a half years, as the 12-month comparison has been negative since June 2001.

Over the past year the tourism industry has been affected by a number of factors, including the economic slowdown in the United States, a higher Canadian dollar, global instability and the severe acute respiratory syndrome (SARS) outbreak.

Monthly percentage change in the CPI: +0.2%
Monthly percentage change in the CPI excluding energy: +0.4%

Between October and November 2003, the CPI increased 0.2%, after falling 0.2% last month. A large part of this increase was attributable to higher prices for automotive vehicles. Fresh vegetables, beef and natural gas prices also exerted upward pressure on the All-items CPI.

Downward pressure came from price decreases for gasoline, traveller accommodation, air transportation, electricity, as well as women’s clothing.

Excluding the influence of energy prices, the CPI increased 0.4%.

Automotive vehicle prices rose 4.0% in November, as prices for the 2004 models were reflected in the index. Only pure price changes are incorporated in the index, as the CPI compares goods and services of equivalent quality. Therefore, price increases that are a consequence of an improvement in the quality of the product are factored out of the index.

This was the largest monthly increase since November 2000, when the automotive vehicle index rose 4.6%. Compared with last November, when the index rose 2.6%, fewer manufacturer rebates and dealer discounts accompanied the introduction of the new model-year this year.

The price of fresh vegetables jumped 11.1% in November. Increases are typical this time of year as availability of local produce begins to diminish and Thanksgiving celebrations in the U.S. exert pressure on North American demand. Cold, wet weather in California also put upward pressure on prices for broccoli, cauliflower, celery and lettuce.

Beef prices jumped 6.7% from October to November 2003, the strongest monthly advance since May 1982.

Although beef prices remain below the levels seen before the discovery of mad cow disease in May, they stand 11.7% higher than the recent low reached in September and 1.4% higher than November 2002 levels.

After decreasing 8.3% in October, the natural gas price index increased 4.1% in November, mostly under the pressure of price increases in Ontario.

Gasoline prices fell a further 2.9%, after registering a decrease of 6.6% last month. Price reductions were registered in all provinces except British Columbia, where prices rose 0.8%.

Lower prices for air transportation, electricity and women’s clothing also contributed to the downward pressure.

The seasonally adjusted CPI increased 0.3% from October to November 2003

After seasonal adjustment, the CPI rose by 0.3% from October to November.

Higher seasonally adjusted indexes for transportation (+0.9%), recreation, education and reading (+0.5%), clothing and footwear (+0.8%), food (+0.2%), shelter (+0.1%), and health and personal care (+0.3%) contributed to the increase, while household operations and furnishings, and alcoholic beverages and tobacco products remained stable.

Special aggregates

All-items excluding the eight 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 1.8% from November 2002 to November 2003.
This matches the 12-month advance of 1.8% in October and marks the fifth consecutive month of increases below the 2.0% mark.

Contributing most to the 12-month rise in November were higher automotive vehicle insurance premiums, tuition fees, homeowners’ replacement cost, homeowners’ insurance premiums and restaurant meal prices.

Lower prices for automotive vehicles, electricity and traveller accommodation over the last twelve months helped moderate the impact of these increases on the All-items CPI excluding the eight most volatile items.

From October to November, the All-items index excluding the eight most volatile components, as defined by the Bank of Canada, advanced 0.2%.

Energy

Energy prices fell 0.6% from November 2002 to November 2003.

Lower gasoline (-4.2%) and electricity prices (-4.6%) accounted for most of the decrease, helped by falling fuel oil prices (-6.2%). The downward pressure was partially offset by a 20.9% jump in natural gas prices.

From October to November, energy prices fell 1.2%, due mostly to price declines for gasoline (-2.9%) and to a lesser extent for electricity (-1.2%). Price increases were registered for natural gas (+4.1%) and fuel oil (+2.3%).

Goods and services

From November 2002 to November 2003, prices in the goods sector decreased 0.3%.

Downward pressure came from the durable goods index (-1.6%), due in large part to lower automotive vehicle prices. The semi-durable goods index was also down (-0.8%), mostly under the influence of falling prices for clothing and athletic footwear. Higher prices for non-durable goods (+0.8%), in particular natural gas and cigarettes, exerted some upward pressure.

Widespread price increases caused the services index to climb 3.2% compared with November 2002. The strongest upward push came from higher automotive insurance premiums, while lower traveller accommodation prices exerted the strongest downward pressure.

Between October and November 2003, prices in the goods sector increased on average by 0.6%.

Higher durable goods prices (+1.9%), attributable almost entirely to the rebound in the purchase price of automotive vehicles, caused most of the increase in the goods sector. Non-durable goods prices rose slightly (+0.3%), particularly under the influence of higher prices for fresh vegetables and natural gas. Lower semi-durable goods prices (-0.9%), led by lower clothing prices partially offset these monthly increases.

Lower prices for traveller accommodation (-9.0%) and air transportation
(-4.6%) were the main contributors to the 0.1% decrease in the Services index between October and November 2003.