Analysis

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Consumer prices rose 1.4% in the 12 months to May, following a 1.8% increase in April.

Overall, energy prices rose 6.2% between May 2009 and May 2010, following a 9.8% increase during the 12-month period to April. Excluding energy, the Consumer Price Index (CPI) rose 1.0% in May, after posting a 1.1% increase in April.

In May, prices at the pump were 6.9% higher than a year earlier, after increasing 16.3% the previous month.

In addition, natural gas prices rose 4.7% in May, after posting a 3.3% gain in April. The increase recorded in May was the second consecutive rise after several months of decline.

Prices for fuel oil and other fuels rose 19.9% in May.

Prices for the purchase of passenger vehicles rose for the fifth consecutive month. These prices increased 5.1% following a 5.3% increase in April.

12-month change: Six of the eight CPI components rise

Overall, six of the eight major components of the CPI recorded price increases in the 12 months to May. The exceptions were clothing and footwear as well as recreation, education and reading.

Transportation prices rose 4.1% in the 12 months to May, after increasing 6.2% in April. In addition to paying higher prices for gasoline and passenger vehicles, consumers paid 5.1% more for passenger vehicle insurance premiums.

Shelter costs rose 1.3% in the 12 months to May, after increasing 0.8% in April. Homeowner’s replacement costs rose 4.4% after posting a 2.9% increase in April. In addition to paying higher prices for natural gas, and fuel oil and other fuels, consumers also paid more for electricity.

On the other hand, the mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, declined 5.4% in May, following a 6.1% decrease in April.

Food prices went up 0.8%, following a 1.0% increase in April. The increase posted in May was the smallest since March 2008. Prices for food purchased from restaurants rose 2.2%. Prices also increased for sugar and confectionery, and tomatoes while prices for fresh fruit and potatoes fell.

Consumers paid 0.9% more for household operations, furnishings and equipment in the 12 months to May. This increase followed a 1.1% rise recorded in the 12 months to April. Higher prices were recorded for telephone services and child care.

Prices in the health and personal care component were up 2.2%. Most of the indexes within this component posted increases.

Prices in the recreation, education and reading component fell 0.2% in the 12 months to May. This was the first decline in this index since November 2008. Prices for video equipment and computer equipment and supplies dropped. However, consumers paid more for cablevision and satellite services.

Prices for clothing and footwear declined 1.3%. In this component, lower prices were recorded for women’s and children’s clothing. Prices for women’s footwear also fell.

The provinces

Consumer prices rose in all provinces in the 12 months to May, but at a slower pace than in April. Ontario and three of the four Atlantic provinces registered the largest year-over-year increases.

In Ontario, consumer prices rose 1.9% in May. Prices for the purchase of passenger vehicles were up as were passenger vehicle insurance premiums. Additionally, gasoline prices rose 4.9%, following a 17.6% increase in April.

Although gasoline prices rose in all provinces, the increases observed in the Atlantic provinces were among the largest. Atlantic Canada also registered price increases for fuel oil and other fuels.

Prices rose 0.5% in Manitoba in the 12 months to May, following a 1.0% increase in April. Gasoline prices and the cost of purchasing passenger vehicles were up, whereas prices for natural gas and home and mortgage insurance premiums declined.

In British Columbia, prices advanced 0.6% in May, after rising 1.0% in April. Gasoline and electricity prices rose 9.6% and 9.3%, respectively.

The non-seasonally adjusted monthly CPI rises

In May, consumer prices prior to seasonal adjustment rose 0.3%, the same rate of increase posted the previous month.

Six of the eight major components of the CPI registered month-to-month increases in May: shelter; transportation; recreation, education and reading; food; alcoholic beverages and tobacco products and household operations, furnishings and equipment.

Shelter prices rose 0.5%. Within this component, month-to-month increases in electricity prices and homeowner’s replacement costs were observed.

Transportation prices were up 0.6%. Passenger vehicle insurance premiums and prices for the purchase of passenger vehicles increased. Consumers paid 0.5% less at the pump for gasoline in May than they did in April.

Prices for recreation, education and reading registered a month-to-month increase of 0.7% in May. Within this component, prices for traveller accommodation increased 4.4% between April and May.

On the other hand, consumers paid less for women’s clothing (-4.3%), non-alcoholic beverages (-2.6%) and fresh vegetables (-2.0%).

Seasonally adjusted monthly CPI falls

On a seasonally adjusted monthly basis, the CPI declined 0.1% in May, after remaining unchanged from March to April. The clothing and footwear index fell 0.4%. Prices also declined in the health and personal care component, in recreation, education and reading, as well as in food.

12-month change in the Bank of Canada’s core index

The Bank of Canada’s core index advanced 1.8% in the 12 months to May, following a 1.9% rise in April. Price increases were recorded for the purchase of passenger vehicles, passenger vehicle insurance premiums, homeowner’s replacement costs and telephone services.

On a month–to-month basis, the core index before seasonal adjustment rose 0.3%, the same rate of increase posted the previous month.

The seasonally adjusted monthly core index rose 0.1% in May, after increasing 0.2% in April.