View the most recent version.

Fuelled by higher gasoline prices and mortgage interest cost, consumer prices increased 2.5% between November 2006 and November 2007, this represents a slight acceleration from the 12-month change of 2.4% posted in October. However, the Bank of Canada’s core index increased only 1.6%, posting its slowest 12-month increase since April 2006.

The gap between the rate of growth in the all-items CPI and the core index is attributable to gasoline and mortgage interest cost, two components that pushed up the all-items CPI but which are not accounted for in the core measure. Excluding gasoline, the all-items index increased 1.7% between November 2006 and November 2007.

The Bank of Canada’s core index, used to monitor the inflation control target, rose only 1.6%, its slowest 12-month increase since April 2006. The core index has slowed since July this year. The 12-month change was 2.0% in September, and 1.8% in October.

On a seasonally adjusted basis, consumer prices were up 0.4% in October over November 2007, while the seasonally adjusted core index remained unchanged during that period.

Unadjusted, consumer prices were 0.3% higher in November compared to October 2007, after declining 0.3% during the previous month. This reversal was mainly due to the movement in gasoline prices, which increased 4.0% between October and November following a 3.3% decline during the previous month.

The core index remained unchanged between October and November following a 0.2% decline between September and October.

Twelve-month change: rising consumer prices driven by a 17.6% increase in the price of gasoline

The 2.5% growth rate in consumer prices was mainly driven by the 17.6% year-over-year increase in the price of gasoline in November 2007. This was the most significant annual growth on record since May 2006 when gasoline prices rose 18.6%.

Gasoline has been the dominant factor in the annual growth of the all-items index since September. This growth was partially due to a drop in prices around this time last year and a 4.0% increase in gasoline prices between October and November 2007. The month-to-month increase partly reflects to some extent the surge in the price of crude oil on the global market.

Costs associated with owned accommodation (+5.1%) once again played an important role in the rise of the all-items index over the 12 months proceeding November 2007. The owned accommodation index measures the change in the cost of using an owner-occupied dwelling. The two main components of the owned accommodation index are: the cost of financing the purchase of a house—mortgage interest cost index—and the cost of maintaining the housing structure from wear and tear—homeowner’s replacement cost index.

The mortgage interest cost index advanced 7.0% during this period, up from the 6.7% growth posted in October. The 4.9% annual increase in homeowners’ replacement cost also contributed to the rise in costs for owned accommodation. The pace of growth of this component continued to slow in line with changes in new housing prices.

Canadians paid 2.4% more for restaurant meals compared to the same month last year. Although this item is a major contributor to growth in consumer prices, the increase is the most moderate since June 2007.

A 3.9% drop in vehicle purchase and lease prices was the main factor mitigating the increase in consumer prices. November was marked by the introduction of 2008 models and the fact that manufacturers continued to offer rebates on many new 2008 models. This was the largest 12-month decrease on record.

Prices for fresh vegetables fell 11.1% on the heels of a 14.6% drop in October. The combined effect of lower prices for tomatoes (-24.2%) and potatoes (-14.2%) has brought significant downward pressure to bear on this component.

Canadians also enjoyed lower prices for fresh fruits (-6.2%). Reduced prices for oranges were the main underlying sources of this decline.

Prices for computer equipment and supplies continued to fall in November (-14.9%). Cheaper parts supported by technological advances and market competition all contributed to a decline in this component.

Consumer price growth cools in Alberta

Gasoline prices were the main contributor to CPI growth in all provinces except Saskatchewan and Alberta, where they were second to owned accommodation costs.

The year-over-year growth in the price of gasoline increased in November in all provinces. This acceleration was especially steep in Nova Scotia where growth of gasoline prices went from 12.2% in October to 19.6 % in November.

Between November 2006 and November 2007, consumer prices increased at rates faster than the national average in five provinces: Prince Edward Island (+2.9%), Nova Scotia (+2.8%), New Brunswick (+3.2%), Saskatchewan (+4.0%) and Alberta (+4.7%).

The growth in consumer prices slowed in Alberta, where the 12-month increase in November was 4.7% compared with 5.0% in October. This was due mainly to movement of the natural gas prices, which fell 3.2% in November after increasing 16.0% in October.

Monthly change: gasoline reverses the change in the all-items index

On an unadjusted basis, consumer prices were up 0.3% between October and November 2007 following a 0.3% decline the previous month. This reversal stems mainly from changes in gasoline prices, which rebounded by 4.0% on a monthly basis after dropping 3.3% between September and October. The monthly rise posted in November, which occurs at a time when crude oil prices on the world market are at record levels, is the most significant reported since May 2007.

Mortgage interest cost (+0.8%) also contributed to growth in the all-items index. This component has continued to grow at a monthly rate of between 0.7% and 0.8% since July 2007. Mortgage loan renewals at higher rates contributed to the growth in this component almost as much as increasing new housing prices.

The price of bakery products increased by 3.8% as world wheat prices held at record levels, reflecting the lowest production levels in the past 25 years and a drought affecting wheat production in Australia.

Canadians paid 4.5% more for fresh vegetables in November compared to October 2007.

A 3.1% jump in the cost of travel by bus or subway also exerted upward pressure on Canadians’ transportation expenditures. This is the sharpest rise since June 1996, and was due to increased public transit rates in Ontario.

With the onset of winter, the price of fuel oil and other fuels grew by 4.7%, the steepest rise in this item since September 2005 when hurricane Katrina affected the petroleum industry.

The impact of these increases was partly offset by traveller accommodation, which fell 5.5%. Monthly decreases are frequent between October and November. Decreases were especially marked in high tourism areas. A slowdown of the same magnitude (-6.6%) also occurred from October to November 2006.

The decline in prices for electricity (-1.6%) also exerted significant downward pressure on the all-items index. The decrease in electricity prices occurred mainly in Ontario, where the winter rate schedule took effect on November 1^st. Ontario enjoyed a lower rate on their first 1 000 kWh/month of consumption, whereas this lower rate applied to the first 600 kWh/month in October.

A drop in the price of natural gas (-2.9%) also moderated growth in consumer prices. This decrease was recorded as mild weather contributed to low demand and stocks were high.

Women’s clothing was down 1.3% as retailers began discounting winter apparel.

Year-over-year growth in the core index continued its slowdown which began in July 2007

The Bank of Canada’s core index grew by 1.6% in November 2007 compared to November 2006, less than the 1.8% growth rate recorded the previous month. This slowdown is mainly due to a decline in vehicle purchase and lease prices (-3.9%). The growth posted in November is the lowest recorded since April 2006.

The core index 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; heating oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies.

From October to November 2007, the unadjusted core index remained unchanged compared to a 0.2% decrease the previous month.

The combined increases in all energy components push the energy price index to its highest level since July 2006

The energy product price index grew by 10.3% over the 12-month period prior to November 2007, outpacing the 8.6% growth rate in the previous period. This is the highest growth of this index since July 2006 and is the combined effect of growth in all energy components. The price of gasoline, up 17.6% during the period, exerted the strongest upward pressure. In order of importance, the other components that contributed to the increase were heating oil and other fuels (+20.2%); electricity (+1.0%); fuel, parts and supplies for recreational vehicles (+10.9%); and natural gas (+0.6%).

The energy index increased by 1.5% between October and November 2007 following a 1.5% drop the previous month. This reversal was mainly due to the change in the price of gasoline, which increased 4.0% from October to November after falling 3.3% the previous month. The other components exerting strong upward pressure were fuel oil and other fuels (+4.7%), and fuel, parts and supplies for recreational vehicles (+2.6%). Lower electricity (-1.6%) and natural gas (-2.9%) prices only partially offset the upward pressure from other components on the energy index.

Gasoline pushes up non-durable good index while passenger vehicles push down the durable good index

The unadjusted goods index was up 1.4% in the 12 months leading to November 2007, identical to the rate posted in October.

Non-durable goods (+3.8%) exerted the strongest upward pressure on the goods index. The strongest increase in this component observed since July 2006 was mainly the result of rising energy component prices over the period. In order of importance, those components that contributed most significantly to the increase in the price of non-durable goods were gasoline (+17.6%), heating oil and other fuels (+20.2%) and electricity (+1.0%). The increase in the non-durable goods index was offset in part by the decline in the price of fresh vegetables (-11.1%).

The durable goods index fell 3.0%, the largest decline since its inception. This drop was mainly due to lower prices for vehicle purchases (-3.8%), computer equipment and supplies (-14.9%) and tools and other household equipment (-4.4%).

Higher prices for semi-durable goods (+0.2%) also contributed, although to a lesser extent, to higher prices of goods. Growth in prices for books and other printed matter (excluding textbooks) (+3.3%) was the primary source of this increase. The impact of this component was partially offset by lower prices for clothing (-1.3%).

The goods index rose 0.5% from October to November 2007, mainly due to higher prices for non-durable goods (+0.9%). The month-over-month increase in non-durable goods was itself supported by the increased price of gasoline (+4.0%). During the same period, prices for semi-durable goods decreased (-0.6%) and prices for durable goods remained stable (0.0%).

The price of services was up 3.4% between November 2006 and November 2007. This is the slowest growth rate recorded since June 2007 and was primarily due to the rise in mortgage interest cost (+7.0%) and homeowners’ replacement cost (+4.9%). Growth was partially offset by lower prices for vehicle leases (-3.9%).

Unadjusted service prices rose by 0.1% between October and November 2007. The rate of growth of this index has slowed since September 2007. The most significant upward pressure on this index came from mortgage interest cost (+0.8%). However, lower prices for traveller accommodation (-5.5%) was a major contributor to the monthly slowdown of that index.

Seasonally adjusted CPI up 0.4% between October and November

On a seasonally adjusted basis, the all-items CPI advanced by 0.4% between October and November 2007, up from the 0.0% recorded last month. The November increase was mainly attributable to transportation (+1.3%) and, to a lesser extent, to clothing and footwear (+0.6%).

In contrast to the All-items, the seasonally adjusted core index reported no change between October and November 2007.