Analysis

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Consumer prices rose 2.3% in the 12 months to December, following a 2.9% increase in November. The 0.6 percentage point difference was led by a slower increase in gasoline prices as well as declines for the purchase of passenger vehicles. A slower year-over-year increase for food was also a factor.

The cost of gasoline rose 7.6% in the 12 months to December, after advancing 13.5% in November. Gasoline prices have declined steadily on a monthly basis starting in June.

On a year-over-year basis, prices for the purchase of passenger vehicles fell 0.2% in December following a 1.8% rise the month before. On a monthly basis, prices declined 2.3% as manufacturers continued to offer discounts on various vehicles including new 2012 models.

Consumers paid 4.4% more for food in the 12 months to December, following a 4.8% increase the month before. The year-over-year change for food purchased from stores eased in December to a 5.0% gain from 5.7% in November.

12-month change: Prices up in all major components

On a year-over-year basis, prices rose in all eight major components in December. Transportation and food continued to post the largest increases.

The cost of transportation went up 3.3% in the 12 months to December, after rising 5.7% in November. The December gain was the smallest increase in over a year. The slower rise was largely attributable to a slower year-over-year increase in gasoline prices as well as price decreases posted for the purchase of passenger vehicles.

Food prices rose 4.4% in the 12 months to December. Consumers paid more for food purchased from stores as prices increased for common staples, including meat (+5.3%), fresh vegetables (+11.1%) and bread (+8.8%).

Shelter costs rose 1.8% in the 12 months to December. This followed a 1.5% increase posted in November. The index for electricity went up 5.4%, led by price increases in Alberta. Consumers also paid more for fuel oil and homeowners' replacement costs. Conversely, mortgage interest cost decreased 0.7% year-over-year in December after falling 1.1% the month before.

Provinces: Gasoline and food purchased from stores still major factors in every province

Consumer prices rose at a slower rate in December in every province except for Prince Edward Island, where the 12-month increase matched the gain the month before. New Brunswick posted the largest increase (+3.3%) while British Columbia recorded the smallest gain (+1.7%). Gasoline and food purchased from stores continued to be major factors in all provinces.

In Ontario, prices went up 2.0% in the 12 months to December, after advancing 2.5% the previous month. Ontario drivers paid 6.9% more for gasoline after paying 11.6% more in November. The cost of passenger vehicle insurance premiums also rose on a year-over-year basis while prices for the purchase of passenger vehicles declined.

Prices in Quebec rose 2.5% on a year-over-year basis in December, following a 3.2% increase the month before. Gasoline prices went up 9.9% after increasing 14.7% in November. Consumers also paid more for food purchased from restaurants and fuel oil.

In Alberta, prices increased 2.9% in the 12 months to December, following a 3.2% rise in November. The December increase was led by higher prices for electricity. Gasoline prices went up 5.1% after advancing 15.1% the month before. Alberta consumers also paid more in passenger vehicle insurance premiums.

Prices in British Columbia rose 1.7% on a year-over-year basis in December following a 2.3% gain in November. Consumers paid 5.9% more for gasoline after paying 12.8% more the month before. The cost of homeowners' home and mortgage insurance increased while prices for the purchase of passenger vehicles decreased.

Seasonally adjusted monthly CPI declines

On a seasonally adjusted monthly basis, consumer prices decreased 0.2% from November to December, after rising 0.1% from October to November. The transportation index, which includes gasoline and the purchase of passenger vehicles, fell 1.1% in December after increasing 0.3% the month before.

The clothing and footwear index decreased 0.1% while the shelter index rose 0.4%. The indexes for health and personal care as well as food also increased in December.

Non-seasonally adjusted monthly CPI decreases

Consumer prices, before seasonal adjustment, fell 0.6% from November to December, following a 0.1% rise from October to November. On a monthly basis, prices declined in four of the eight major components.

The cost of transportation fell 1.9% in December after rising 0.9% the month before. The decline was led by a 3.0% decrease in gasoline prices and a 2.3% drop in prices for the purchase of passenger vehicles.

The clothing and footwear index fell 4.3% in December as prices for women's, men's, and children's clothing all declined. This decrease follows a 3.1% decline in November.

The recreation, education and reading index declined 0.7% in December after falling 1.1% the month before. Consumers paid 3.2% less for traveller accommodation while prices for computer equipment, software and supplies increased 1.1%.

Shelter costs rose 0.4% this month, after decreasing 0.2% in November. Electricity prices increased 3.0% led by gains in Alberta. Homeowners' replacement costs as well as homeowners' home and mortgage insurance went up.

At the provincial level in December, prices fell in every province. Nova Scotia posted the largest monthly decline (-1.0%) while Alberta recorded the smallest (-0.1%).

Bank of Canada's core index

The Bank of Canada's core index rose 1.9% in the 12 months to December, after increasing 2.1% in November. Increases were recorded for food purchased from restaurants and passenger vehicle insurance premiums, while prices for the purchase of passenger vehicles declined.

On a month-over-month basis and before seasonal adjustment, the core index fell 0.5% in December following a 0.1% rise in November.

The seasonally adjusted monthly core index posted no change in December.

Annual Review of the 2011 Consumer Price Index

The following section examines the annual average movement in components of the Consumer Price Index (CPI) for 2011 as a whole. Annual average indexes are obtained by calculating the average of the monthly index values over the calendar year. Annual average percentage changes should not be confused with the 12-month change in the CPI, which compares indexes for a given month to indexes for the same month a year earlier.

Gasoline and food price increases led faster growth in CPI in 2011

In 2011, the annual average increase in consumer prices was 2.9%. This followed a 1.8% rise in the annual average index in 2010. The faster growth in 2011 was largely attributable to higher prices for gasoline and food. The 2011 increase was slightly higher than the annual average growth rates observed in the early 2000s.

The year 2011 marked the largest annual average rise in gasoline prices in a decade, as consumers paid 20.0% more at the pump. This gain followed a 9.1% rise in 2010 and a 17.5% decline in 2009. Much of the increase in gasoline prices was the result of monthly gains recorded early in the year. While gasoline continued to post positive 12-month changes throughout the year, prices eased in the latter half of 2011.

Food prices rose 3.7% on average in 2011 after increasing 1.4% in 2010. Food purchased from stores increased at a faster rate in 2011 (+4.2%) compared with 2010 (+1.0%). In 2011, consumers paid more for many common staples including meat, fresh vegetables and bread. Food purchased from restaurants also went up.

Annual change: Prices up in all eight major components

For 2011 as a whole, prices increased in all eight major components of the Consumer Price Index. With the exception of health and personal care, every major component posted a larger increase in 2011 compared to 2010.

The cost of transportation went up 6.4% on average in 2011. This compares to the 4.3% increase recorded in 2010. In addition to paying more for gasoline, consumers also paid 4.4% more in passenger vehicle insurance premiums.

Shelter costs rose 1.9% in 2011, following a 1.4% increase in 2010. Consumers paid 25.2% more for fuel oil and 3.1% more for property taxes in 2011. Conversely, mortgage interest cost declined 1.8%. Natural gas also declined for the third consecutive year.

In 2011, the clothing and footwear index increased 0.3%. This was the first increase recorded in 10 years. The leading factor behind the positive change was the 10.4% rise in jewellery prices, which peaked in the summer alongside record high gold prices. Prices for many of the remaining clothing and footwear components declined at a slower rate in 2011 compared with 2010.

Provinces: Prices increase at faster rate in all provinces in 2011

Consumer prices increased at a faster rate in every province in 2011 compared with 2010. The largest annual average gain was recorded in Nova Scotia (+3.8%) and the smallest in Alberta and British Columbia (+2.4%). Gasoline and food purchased from stores led the increase in every province for 2011. Other increases included fuel oil in the Atlantic Provinces and electricity in Alberta.

The Bank of Canada's core index

On an annual basis, the Bank of Canada's core index increased 1.6% in 2011 following a 1.8% rise in 2010. The 2011 rise is the smallest annual average increase in the Core CPI since 2005.