Highlights
The All-items Consumer Price Index rose by 1.4% between November 2005 and November 2006, up from the 0.9% growth recorded the previous month. Despite this increase, the growth rate of the All-items index remains well below the 2.3% average for the last five years.
Gasoline prices increased slightly in November 2006, in contrast with the dizzying decrease posted last year at this time, which fuelled an increase in the 12-month change in the All-items index. This adjustment in gasoline prices occurred alongside the rising prices for owned accommodation observed over the past several months. However, a decrease in prices for new automotive vehicles helped relieve this upward pressure.
Percentage change in the gasoline index from the same month of the previous year
The 12-month change in the All-items index excluding energy was up by 1.8% in November 2006, compared with 2.0% in October. Homeowners had to spend a little more this month once again because of the upward pressure exerted on this index by replacement cost and mortgage interest cost, among other factors.
The Core Consumer Price Index (CPI), used by the Bank of Canada for the purpose of monitoring the inflation-control target, rose by 2.2% between November 2005 and November 2006, compared with 2.3% the previous month.
On a monthly basis, following a 0.2% decrease the previous month, the All-items index increased by 0.2% in November. Owing to their weight in the CPI basket, prices for purchasing and leasing automotive vehicles accounted for most of the rise in the All-items index.
In November, for the second month in a row, the All-items index excluding energy edged up by 0.2%. Prices for purchasing and leasing automotive vehicles also exerted a strong influence on the month-over-month increase in this index.
The monthly Core CPI was up by 0.3% in November, in the wake of a 0.1% increase in October.
Twelve-month percentage change in the CPI: +1.4%
Twelve-month percentage change in the CPI excluding energy: +1.8%
The All-items CPI rose by 1.4% between November 2005 and November 2006, up from the 0.9% increase posted the previous month. Homeowners’ costs pushed the index up this month as well.
Over the past 12 months, rising homeowners’ replacement cost and mortgage interest cost were the main factors behind the increase in the All-items CPI. Food purchased from restaurants and electricity also contributed to this increase, although to a lesser extent. During this same period, prices for purchasing and leasing automotive vehicles, natural gas, gasoline, and heating oil and other fuels had a moderating effect on the rise in the CPI.
Percentage change from the same month of the previous year, Canada
Between November 2005 and November 2006, homeowners’ replacement cost, which represents the worn-out structural portion of housing and is estimated using new housing prices (excluding land), shot up by 8.2%.
Across the country, provincial differences in replacement cost were still present in November. Once again, Alberta posted the largest increase, at 45.2%. Saskatchewan (+9.1%), Manitoba (+6.8%) and British Columbia (+4.6%) were far behind, with smaller increases. Ontario (+3.6%), Quebec (+3.0%) and New Brunswick (+2.3%) recorded relatively modest rates of growth, while Nova Scotia posted a 0.1% decrease during this period.
Over the past year, mortgage interest cost, which measures changes in the amount of mortgage interest owed by consumers, climbed 4.7%. This represents the largest increase since March 2001 and since November 2005, the annual rate of growth has been continually rising. For the first time since March 2003, interest rates exerted a positive influence on the rise in mortgage interest cost.
Prices for food purchased from restaurants (+2.8%) also contributed to the increase in the 12-month change in the All-items CPI in November.
Electricity rates rose 5.0% between November 2005 and November 2006, putting upward pressure on the All-items index. This increase is attributable to last year’s rate hikes in Ontario (+4.7%), Alberta (+18.7%), Quebec (+3.3%), and British Columbia (+4.0%).
Lower prices for purchasing and leasing automotive vehicles, fossil fuels, and computer equipment and supplies exerted downward pressure on the All-items CPI calculated over 12 months.
The yearly change in prices for purchasing and leasing automotive vehicles fell 2.0% in November 2006. Benefiting from financial incentives offered by car manufacturers, consumers were able to pay less for their new 2007 vehicles, which came with more enhanced equipment than last year’s models.
Lower prices for natural gas and gasoline helped slow the growth in the 12-month All-items CPI. To a lesser extent, heating oil and other fuels also placed downward pressure on the All-items CPI.
The natural gas index plunged 14.1% over the past 12 months. All provinces posted rate reductions in November, with Alberta (-24.4%) and Ontario (-10.7%) leading the way. This downward movement in natural gas prices over the past two years reflects an international trend.
Gasoline prices fell only 3.1% between November 2005 and November 2006, following drops of more than 14.0% during the previous two months. The fact that the 12-month change in gasoline prices shrank between October and November accounts for much of this month’s rise in the All-items CPI. Last year, gasoline prices decreased substantially between October and November (-11.2%), whereas they rose slightly (+0.4%) during the same period this year, thus contributing to the increase in the All-items index.
Consumers in every part of Canada have benefited from lower gasoline prices over the last year. The most significant decrease was observed in New Brunswick (-9.3%), while British Columbia posted a slight drop of 0.6%.
In November, the 12-month change for heating oil and other fuels was 13.0%, largely as a result of lower prices in Quebec (-12.3%), Ontario (-10.2%), and Nova Scotia (-14.2%).
Between November 2005 and November 2006, prices for computer equipment and supplies fell by 19.3%, thereby moderating the upward pressure on prices. This decline has been observed for the past several years and reflects the technical progress in information technology products. This stands in marked contrast to energy prices, whose recent slowdown is more a reflection of the easing of the effects of unforeseen events (such as political instability in the Middle East and Hurricane Katrina) that have influenced this index in recent years.
Non-seasonally adjusted monthly percentage change in the CPI: +0.2%
Non-seasonally adjusted monthly percentage change in the CPI excluding energy: +0.2%
Following on the heels of the 0.2% reduction in October 2006, the All-items CPI edged up 0.2% between October and November 2006, primarily owing to prices for purchasing and leasing automotive vehicles.
Prices for food purchased from restaurants, natural gas, and mortgage interest cost also pushed the All-items CPI up in November 2006. However, prices for electricity, women’s clothing, and homeowners’ maintenance and repairs mitigated the extent of this increase somewhat.
Between October and November 2006, prices for purchasing and leasing automotive vehicles, for which the index reflects the prices for the new 2007 models, rose by 1.8%.
Each November, the new vehicle models (in this case, 2007) replace the models from the current year (2006) in the CPI sample. The new models are then compared with the previous year’s models, but only pure price changes are incorporated into the index, as price increases due to improved product quality are not captured in the index.
Prices for automotive repairs and maintenance also rose by 2.6%, in line with the usual trend for November, although this was the most pronounced increase since January 1991 (+5.3%).
Prices for food purchased from restaurants pushed the All-items CPI upward, as they rose by 0.7% between October and November 2006.
In November, natural gas prices climbed by 4.0%. This rise was attributable to a 21.3% jump in prices in Alberta in response to market fluctuations, with Saskatchewan (+3.3%) trailing far behind. The other provinces posted slight decreases.
Mortgage interest cost edged up by 0.5% in November, an increase similar to those recorded in previous months.
In November 2006, electricity, women’s clothing, and homeowners’ maintenance and repairs all served to slow the increase in the monthly All-items index.
The 2.1% drop in electricity prices between October and November 2006 was largely due to a price decrease in Ontario (-4.9%), as some rate reductions took effect on November 1. Several cities in Alberta (-2.9%) also reduced their rates in November.
Sales in the women’s clothing sector pushed prices down by 2.1%, consistent with the usual trend for November, when fall collections are discounted.
Lower prices for homeowners’ maintenance and repairs (-1.3%) also had a moderating effect on the All-items index.
The seasonally-adjusted CPI rose by 0.3% between October and November
The seasonally-adjusted CPI rose by 0.3% between October and November 2006. Most of the components were up this month. Increases in the indexes for transportation (+1.0%), clothing and footwear (+0.9%), food (+0.2%), recreation, reading and education (+0.2%), health and personal care (+0.2%) and alcoholic beverages and tobacco products (+0.1%) contributed to the growth of the seasonally-adjusted index. Prices for household furnishings and equipment remained unchanged in November (0.0%). The 0.1% decline in the shelter index put a small amount of downward pressure on the seasonally-adjusted All-items index in November.
The seasonally-adjusted Core Index as established by the Bank of Canada remained unchanged (0.0%) between October and November 2006, compared with a 0.2% increase the previous month.
Special aggregates
The Bank of Canada’s Core Consumer Price Index
The Core CPI is obtained by removing the effect of the changes in indirect taxes from the All-items CPI from which the eight most volatile components identified by the Bank of Canada have been excluded. These volatile components are fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuel; gasoline; inter-city transportation; and tobacco products and smokers’ supplies.
The 12-month change in the Core Index as identified by the Bank of Canada increased by 2.2% between November 2005 and November 2006, following a 2.3% rise in October. On a monthly basis, this index was up by 0.3% in November, compared with a more modest change of 0.1% the previous month.
Energy
In the wake of an 8.7% decrease the previous month, the energy index dropped by 2.8% between November 2005 and November 2006.
Falling prices for natural gas (-14.1%) and gasoline (-3.1%) were major factors in pushing down the energy index in November 2006. Heating oil and other fuels (-13.0%) also played a role in the decrease in this index, though to a lesser degree. The 12-month change in the indexes for electricity (+5.0%) and for fuel, parts and supplies for recreational vehicles (+0.3%) exerted upward pressure on the energy index.
The monthly energy index remained unchanged (0.0%) between October and November 2006. Price increases for natural gas (+4.0%), gasoline (+0.4%), and fuel, parts and supplies for recreational vehicles (+1.8%) were offset by lower electricity rates (-2.1%) and heating oil prices (-0.7%).
Goods and services
The goods index fell by 0.3% between November 2005 and November 2006. Prices for durable goods and for semi-durable goods decreased in November 2006, while prices for non-durable goods increased.
A number of components contributed to the 2.6% decrease in prices for durable goods: purchases of automotive vehicles (-2.1%), computer equipment and supplies (-19.3%), mattresses and other furniture (-8.5%), and video equipment (-9.5%).
The 0.3% decline in prices for semi-durable goods was largely attributable to lower prices for men’s clothing (-1.8%) and for toys, games and hobby supplies (-3.2%).
Electricity (+5.0%) was the main factor behind the 0.7% increase in the non-durable goods index. Cigarette prices (+2.7%) also helped moderate the effect of the decrease in fossil fuel prices on the non-durable goods index. Lower prices for natural gas (-14.1%), gasoline (-3.1%) and heating oil (-13.0%) mitigated the increase in the non-durable goods index between November 2005 and November 2006.
The goods index rose by 0.4% between October and November 2006. The indexes for durable goods (+1.0%) and non-durable goods (+0.4%) were partly responsible for this increase, while semi-durable goods (-0.8%) had a slight dampening effect on the goods index.
The 12-month change in the services index rose by 3.0% in November. Increases in homeowners’ replacement cost (+8.2%) and mortgage interest cost (+4.7%) were the main factors in the upswing of the services index.
On a monthly basis, the 0.1% rise in the services index was due to food purchased from restaurants (+0.7%) and higher mortgage interest cost (+0.5%).
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