Analysis

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The Consumer Price Index (CPI) rose 1.0% in the 12 months to January, following a 1.5% increase in December.

Lower gasoline prices continue to 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 26.9% in the 12 months to January, after declining 16.6% in December.

Excluding gasoline, the CPI increased 2.4% on a year-over-year basis in January, following a 2.3% rise the previous month.

On a monthly basis and before seasonal adjustment, the gasoline price index fell 12.4% in January. Between June 2014 and January 2015, gasoline prices decreased 33.9%. In January, the gasoline price index was at its lowest level since April 2009.

12-month change in the major components

Prices rose on a year-over-year basis in seven of the eight major components in January. Higher prices for food led the rise in the CPI, followed by increased shelter costs. The transportation index, which includes gasoline, declined on a year-over-year basis for the third consecutive month.

Food prices advanced 4.6% on a year-over-year basis in January, the largest gain since November 2011. Prices for food purchased from stores were up 5.4% in the 12 months to January, following a 4.2% rise the previous month. Prices for both fresh fruit and fresh vegetables posted higher year-over-year increases in January than in December. Consumers paid 2.8% more for food purchased from restaurants in January compared with the same month in 2014.

The shelter index rose 2.0% in the 12 months to January, following a 2.4% gain in December. Natural gas prices increased 13.9% on a year-over-year basis in January, after recording a 16.5% rise the previous month. In contrast, prices for fuel oil declined 21.1% in January compared with the same month a year earlier.

Transportation costs declined 5.3% in the 12 months to January as gasoline prices continued to fall. Conversely, consumers paid 1.2% more for the purchase of passenger vehicles on a year-over-year basis.

12-month change in the provinces

Consumer prices in the Atlantic provinces fell in the 12 months to January. In the other provinces, consumer prices rose at slower year-over-year rates in January compared with December.

In all provinces, gasoline prices fell more on a year-over-year basis in January than in the previous month.

Consumer prices decreased in all four Atlantic provinces in the 12 months to January. The largest decline was in Prince Edward Island (-1.9%), while the smallest was in New Brunswick (-0.2%). In addition to lower prices for gasoline, year-over-year declines in the cost of fuel oil were a notable factor in the Atlantic provinces. The CPI basket weight for fuel oil in these provinces is larger than in Canada as a whole.

Ontario’s CPI rose 1.6% in the 12 months to January, the largest increase among the provinces. On a year-over-year basis, prices in Ontario for natural gas (+25.7%), clothing (+6.8%) and homeowners’ home and mortgage insurance (+14.5%) increased more than at the national level.

Seasonally adjusted monthly Consumer Price Index decreases

On a seasonally adjusted monthly basis, the CPI decreased 0.2% in January, matching the declines in December and November.

Of the eight major components, one declined and seven increased on a seasonally adjusted monthly basis in January.

The seasonally adjusted transportation index fell 2.5% in January, following a 1.3% decrease in December. January marked the third consecutive monthly decline in this index.

Conversely, the seasonally adjusted food index rose 0.7%, marking the fifth consecutive monthly gain in this index. Before seasonal adjustment, the food index advanced 1.2% on a monthly basis, indicating that food prices increased more than usual for January. On an unadjusted monthly basis, prices rose for fresh fruit (+6.6%) and fresh vegetables (+5.2%).

Non-seasonally adjusted monthly Consumer Price Index decreases

On a monthly basis and before seasonal adjustment, the CPI declined 0.2% in January. This decline followed a 0.7% decrease in December.

Consumer prices fell in all provinces on a monthly basis in January. Among the provinces, Prince Edward Island (-1.1%) posted the largest decline, while Ontario, Saskatchewan and British Columbia recorded the smallest decreases (-0.1%).

Bank of Canada’s core index

The Bank of Canada’s core index rose 2.2% in the 12 months to January, matching the increase in December.

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

The seasonally adjusted core index rose 0.2% on a monthly basis in January, matching the gain in December.

Note to readers

The public is invited to chat with an expert on the Consumer Price Index (CPI) on Friday, February 27, 2015, from 1:30 to 2:30 p.m., Eastern Time.

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.

Basket update

The basket of goods and services used in the calculation of the CPI has been updated with the release of the January 2015 data.

The new weighting pattern is based on the 2013 Survey of Household Spending (SHS). It replaces the previous weights, which were based on the 2011 SHS.

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

There are no changes to the CANSIM table and vector numbers. There are 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 optimization to improve geographic, outlet and product coverage, as well as updates to the CPI product classification.

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