Highlights

In December 2005, consumers paid 2.2% more than in December 2004 for the goods and services included in the Consumer Price Index (CPI) basket, a slight increase as compared to the 2.0% rise recorded in November. The 12-month change in the All-items index excluding energy was up 1.4% from December 2004 to December 2005, the same rate of increase as for November 2005.

Gasoline prices were the main factor of the increase in the 12-month change in the All-items index between November and December. Although gasoline prices have continued to decline from their peak of September 2005, their level in December 2005 was still higher than that of December 2004.

The All-items index excluding the eight volatile components identified by the Bank of Canada rose by 1.6% between December 2004 and December 2005, the same increase as recorded in November.

On a monthly basis, the All-items index slid 0.1% between November and December after dropping 0.2% in November. The fact that gasoline prices did not drop as sharply as in the previous month attenuated the decrease in the All-items index.

The All-items index excluding the eight volatile components identified by the Bank of Canada decreased by 0.1% in December, as compared to an increase of 0.4% in November.

Twelve-month percentage change in the CPI: +2.2%
Twelve-month percentage change in the CPI excluding energy: +1.4%

In December, the CPI recorded a 2.2% increase as compared to December 2004. The main factors behind this increase were gasoline prices, homeowners’ replacement cost and restaurant meals.

These increases were moderated by lower prices for computer equipment and supplies and for fresh vegetables.

Following a 12-month rise of 9.4% in November, gasoline prices increased 14.6% between December 2004 and December 2005. Increases were posted in all provinces and ranged from 7.3% in Manitoba to 18.0% in Ontario.

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

Homeowners’ replacement cost, which represents the worn out structural portion of housing and is estimated using new housing prices (excluding land), rose 5.0% as compared to December 2004. This index has increased continually since February1997. The upward pressure came mainly from higher material and labor costs.

Consumers noticed a 2.8% rise in prices for restaurant meals between December 2004 and December 2005. All provinces recorded increases ranging from 2.2% in Nova Scotia to 3.5% in Quebec.

Exerting a dampening effect on the 12-month change in the All-items index, the index for computer equipment and supplies plunged 18.1% as compared to December 2004. On average for the 2005 calendar year, these prices were 20.7% lower than those of 2004.

Also exerting a dampening effect were prices for fresh vegetables which posted a 5.8% decrease between December 2004 and December 2005. Prices for tomatoes (-39.7%) and lettuce (-19.9%) accounted for most of this decrease.

For six of the eight major components of the CPI, prices in December 2005 were higher than those of December 2004. The indexes for transportation (+4.3%), shelter (+2.8%) and food (+1.7%) exerted the strongest upward pressure. The indexes for clothing and footwear (-0.4%) and for recreation, education and reading (-0.2%) exerted downward pressure.

Annual percentage change in the CPI: 2.2%

Annual percentage change in the CPI excluding energy: 1.5%

For 2005 as a whole, consumers paid an average of 2.2% more than they did in 2004 for the goods and services included in the CPI basket. This was a larger increase than the 1.9% annual average rise measured in 2004.

The main contributors to this increase were gasoline (+12.8%), homeowner’s replacement cost (+5.2%), restaurant meals (+2.9%), property taxes (+4.1%), as well as fuel oil (+25.5%). Many factors had a moderating effect on this increase such as computer equipment and supplies (-20.7%) and traveller accommodation (-4.8%).

The 1.6% annual average rise in the All-items index excluding the eight volatile components identified by the Bank of Canada was slightly higher than the 1.5% increase of 2004.

An annual average index is obtained by averaging the index levels of the 12 months of the calendar year. The change in an annual average index should not be confused with the 12-month change which compares the index level for a given month to its level for the same month of the previous year. Two tables showing the percentage changes in annual average indexes appear on page 23 of this publication.

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

Between November and December, the CPI slipped 0.1%, from a level of 128.2 to 128.1 (1992=100). Lower prices for natural gas, women’s clothing and fuel oil were almost completely offset by higher prices for fresh vegetables and fresh fruit.

The 6.1% drop in natural gas costs is fully attributable to decreases in Alberta (-23.1%) and Quebec (-4.3%) in December. These decreases affected natural gas prices only and not distribution charges or consumer credits.

Prices for women’s clothing fell by 2.8% in December as a result of pre-Christmas sales. Prince Edward Island posted the most substantial decrease (-12.0%), while Saskatchewan (+2.3%), Nova Scotia (+2.3%) and New Brunswick (+0.4%) recorded higher prices.

Fuel oil consumers benefited from a 4.9% price reduction for the month of December. All provinces recorded decreases, ranging from 2.6% in Quebec to 9.1% in British Columbia.

A 9.0% rise in fresh vegetable prices exerted a dampening effect on the decrease in the All-items index. Although all categories of vegetables showed increases, prices for “other fresh vegetables” (+8.7%) and tomatoes (+20.7%) played a strong role in pushing up the index.

For the third straight month, the monthly change in the fresh fruit index showed an upward trend, rising by 4.3% in December 2005. As for fresh vegetables, all categories of fresh fruit showed higher prices, with increases for apples (+3.7%), oranges (+2.6%), bananas (+3.2%) and “other fresh fruits” (+5.3%).

The seasonally adjusted CPI increased 0.2% between November and December

Seasonally adjusted, the CPI was up 0.2% between November and December.

Upward pressure came from the indexes for clothing and footwear (+0.5%), food (+0.1%), recreation, education and reading (+0.1%), as well as health and personal care (+0.2%).

The indexes for shelter (-0.3%), transportation (-0.1%), and alcoholic beverages and tobacco products (-0.3%) exerted downward pressure.

Only the index for household operations and furnishing remained stable in December.

Special aggregates

All-items index excluding the eight volatile components defined by the Bank of Canada

The All-items index excluding the eight volatile components identified by the Bank of Canada increased by 1.6% between December 2004 and December 2005. The main factors behind this increase were homeowners’ replacement cost (+5.0%), restaurant meals (+2.8%), the purchase and leasing of automotive vehicles (+1.8%), and property taxes (+3.2%). The increase was partially offset by lower prices for computer equipment and supplies (-18.1%) and traveller accommodation (-5.1%).

Between November and December 2005, the All-items index excluding the eight volatile components identified by the Bank of Canada edged down by 0.1%. The major contributors to the downward pressure were lower prices for women’s clothing (-2.8%), non-alcoholic beverages (-4.2%), and electricity (-0.9%). Most of the upward pressure came from restaurant meals (+0.3%) and homeowners’ replacement cost (+0.4%).

Energy

Following an 8.8% rise between November 2004 and November 2005, the energy index was up 10.2% between December 2004 and December 2005.

Although all components contributed to the increase in the energy index in December 2005, the gasoline index (+14.6%) was the main factor. Prices for natural gas (+11.9%), fuel oil (+16.2%), electricity (+1.6%) and fuel, parts and supplies for recreational vehicles (+9.4%) also had an impact.

On a monthly basis, the energy index was down 1.7%, largely under the influence of prices for natural gas (-6.1%), fuel oil (-4.9%), gasoline (-0.6%) and electricity (-0.9%) and, to a lesser extent, fuel, parts and supplies for recreational vehicles (-0.5%).

Goods and services

Prices in the goods sector were up 2.2% between December 2004 and December 2005.

All of this increase can be accounted for by the rise in prices for non-durable goods (+3.9%), since prices for durable goods (-0.4%) and semi-durable goods (-0.2%) recorded decreases.

In December, the strongest upward pressure on the index for non-durable goods can be attributed to prices for gasoline (+14.6%), natural gas (+11.9%) and fuel oil (+16.2%). These prices increases were attenuated by lower prices for fresh vegetables (-5.8%). The durable goods index was down 0.4%, largely as a result of lower prices for computer equipment and supplies (-18.1%) and video equipment (-9.0%). This decrease was offset to some extent by higher prices for the purchase of automotive vehicles (+1.8%). The 0.2% drop in the index for semi-durable goods can largely be explained by the decrease in prices for women’s clothing (-1.1%), with most of the moderating effect coming from higher prices for athletic footwear (+3.0%).

The services index was up 2.1% from December of last year. Increases in homeowners’ replacement cost (+5.0%), prices for restaurant meals (+2.8%) and property taxes (+3.2%) played the largest role in this increase. Most of the downward pressure came from lower costs for traveller accommodation (-5.1%) and insurance premiums for automotive vehicles (-0.9%).

The goods index dropped 0.3% between November 2005 and December 2005. Lower prices were recorded for all categories of goods, that is non-durable (-0.3%), semi-durable (-1.0%) and durable (-0.3%).

Between November 2005 and December 2005, the cost of services was up slightly by 0.1%. The cost increase for restaurant meals (+0.3%) was the main factor behind this increase.