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The Consumer Price Index (CPI) rose 1.5% in the 12 months to December, following a 2.0% increase in November.

Lower gasoline prices lead the deceleration in the Consumer Price Index

The slower year-over-year rise in the CPI was mostly attributable to gasoline prices, which dropped 16.6% in the 12 months to December, after falling 5.9% in November.

Excluding gasoline, the CPI increased 2.3% on a year-over-year basis in December, matching the rise in November.

On a monthly basis and before seasonal adjustment, the gasoline price index fell 9.8% in December. Between June and December 2014, gasoline prices have decreased 24.6%. In comparison, prices for gasoline declined 42.7% between June and December 2008.

12-month change in the major components

Prices increased in seven of the eight major components in the 12 months to December. Higher shelter and food costs contributed the most to the rise in the CPI, while the transportation index, which includes gasoline, declined on a year-over-year basis for the second consecutive month.

The shelter index rose 2.4% in the 12 months to December, following a 2.3% gain in November. Natural gas prices increased 16.5% on a year-over-year basis in December, after recording a 14.7% rise the previous month. As well, electricity prices were up 4.3% year over year in December, following a 3.6% increase in November. In contrast, consumers paid less for fuel oil in December compared with the same month a year earlier.

Food prices advanced 3.7% on a year-over-year basis in December, after posting a 3.1% gain in November. Prices for food purchased from stores were up 4.2% in the 12 months to December, following a 3.3% increase the previous month. This acceleration was led by prices for fresh vegetables, which advanced 6.9% year over year in December, after rising 2.6% in November. Consumers also paid more for meat (+13.1%) and food purchased from restaurants (+2.5%) in December compared with the same month in 2013.

Transportation costs declined 2.8% in the 12 months to December as gasoline prices fell. Conversely, consumers paid 1.6% more for the purchase of passenger vehicles on a year-over-year basis in December.

12-month change in the provinces

Year-over-year change in consumer prices decelerated in nine provinces in December compared with November. Manitoba was the exception. Prince Edward Island was the only province to record a decline in its CPI in the 12 months to December.

Lower gasoline prices were observed in all provinces.

Consumer prices in Prince Edward Island declined 0.4% in the 12 months to December, marking the first decrease since October 2009. Gasoline prices in the province fell 18.5% year over year in December. In addition, the cost of fuel oil declined more in Prince Edward Island (-15.7%) than at the national level (-9.8%). The CPI basket weight for fuel oil is 10 times larger in this province than in Canada as a whole.

Manitoba was the only province where consumer prices rose more on a year-over-year basis in December (+1.5%) than in November (+1.1%). The clothing and footwear index in the province accelerated, rising 3.2% in the 12 months to December, after falling 2.7% the previous month.

Seasonally adjusted monthly Consumer Price Index decreases

On a seasonally adjusted monthly basis, the CPI decreased 0.1% in December, after falling by 0.2% in November.

Of the eight major components, four declined and four increased on a seasonally adjusted monthly basis in December.

The seasonally adjusted transportation index fell 1.2% in December, the largest monthly decline of all the major components. This followed a 1.4% decrease in November.

Conversely, the seasonally adjusted food index (+0.5%) recorded the highest rise in December. This marked its fourth consecutive monthly gain on a seasonally adjusted basis.

Non-seasonally adjusted monthly Consumer Price Index decreases

On a monthly basis and before seasonal adjustment, the CPI declined 0.7% in December, the largest monthly decrease since June 2011.

Consumer prices fell in all provinces on a monthly basis in December. Among the provinces, Newfoundland and Labrador, Prince Edward Island and Nova Scotia posted the largest declines (-0.9%), while Saskatchewan and Alberta recorded the smallest (-0.5%).

Bank of Canada’s core index

The Bank of Canada’s core index rose 2.2% in the 12 months to December, after increasing 2.1% in November.

On a monthly basis and before seasonal adjustment, the core index fell 0.3% in December, following a 0.2% decline in November.

The seasonally adjusted core index rose 0.2% on a monthly basis in December, following a 0.1% increase in November.

Annual Review of the 2014 Consumer Price Index

In 2014, the annual average increase in consumer prices was 2.0%. This increase followed gains of 0.9% in 2013 and 1.5% in 2012.

Broad-based acceleration in consumer prices in 2014

All major components posted higher annual average increases in 2014 than in 2013. Larger gains in the indexes for shelter and food contributed the most to the acceleration in the annual average CPI.

Shelter costs advanced 2.7% in 2014, after increasing 1.3% in 2013. This larger gain was partly attributable to the mortgage interest cost index, which fell 0.2% on an annual average basis in 2014 compared with a 3.4% decrease the previous year. Prices for natural gas rose 16.8% in 2014, after increasing 6.9% in 2013.

On an annual average basis, prices for food increased 2.3% in 2014, following a 1.2% rise the previous year. This acceleration was led by meat prices, which advanced 8.0% in 2014, after rising 2.1% in 2013. Low inventories of cattle and hogs in 2014 contributed to higher meat prices. Consumers paid 2.0% more on an annual average basis in 2014 for food purchased from restaurants.

The transportation index rose 1.1% on an annual average basis in 2014, led by higher prices for the purchase of passenger vehicles (+1.3%). Meanwhile, gasoline prices rose 0.2%, the lowest annual average increase since 2009. After increasing in the first half of 2014, the gasoline index posted six consecutive monthly declines. The monthly declines in November and December were the largest since 2008.

Prices for alcoholic beverages and tobacco products rose 4.4% on an annual average basis, primarily due to a 9.1% rise in cigarette prices. In 2014, the federal excise tax on tobacco, as well as the tobacco taxes in Newfoundland and Labrador, Quebec, Ontario, and British Columbia increased.

Consumer prices rise at faster rates in eight provinces in 2014

Among the provinces, eight posted bigger annual average increases in consumer prices in 2014 than in 2013. Ontario recorded the largest acceleration in consumer price inflation. Prince Edward Island and Manitoba were the only two provinces where annual average price increases were smaller in 2014 than in the previous year.

The Bank of Canada’s core index

On an annual average basis, the Bank of Canada’s core index increased 1.8% in 2014, following a 1.3% rise in 2013.

Note to readers

A video providing an overview of the Consumer Price Index (CPI) is available on Statistics Canada's YouTube channel.

A seasonally adjusted series is one from which seasonal movements have been eliminated. Users employing CPI data for indexation purposes are advised to use the unadjusted indexes. For more information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions.

The Bank of Canada's core index excludes eight of the CPI's most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers' supplies) as well as the effects of changes in indirect taxes on the remaining components.

Upcoming basket update

On February 26, 2015, with the release of the January CPI, the basket of goods and services used in the calculation of the CPI will be updated.

The new weighting pattern will be based on the 2013 Survey of Household Spending (SHS). It will replace the current weights, which are based on the 2011 SHS.

The index base period, for which the CPI equals 100, will remain 2002.

There will be no changes to the CANSIM table and vector numbers. There will be some minor changes to published index titles in order to clarify the definition of some series.

There has been and will continue to be ongoing work to update the CPI sample to make it more representative of Canadians’ spending patterns. This work is part of the CPI Enhancement Initiative and includes sample increases to improve geographic, outlet and product coverage, as well as updates to the CPI product classification.

Annual Review

This release examines the annual average movement in the CPI in 2014 as a whole. Annual average indexes are obtained by calculating the average of the 12 monthly index values over the calendar year. Annual average percent change should not be confused with the 12-month percent change that is published every month with the release of the CPI. Unlike annual average change, 12-month change compares the monthly index level with the level from the same month a year earlier.

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