Analysis

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The Consumer Price Index (CPI) rose 0.9% in the 12 months to May, after increasing 0.8% in April.

Lower energy prices continued to moderate the year-over-year rise in the CPI. Excluding energy, the CPI increased 2.2% in the 12 months to May, matching the rise in April.

The energy index decreased 11.8% in the 12 months to May, following a 13.5% decline in April. The fall in the energy index was led by gasoline prices, which were down 17.4% in May compared with the same month a year earlier. This decrease followed a 21.0% year-over-year decline in April.

The natural gas index was down 14.4% in the 12 months to May. Additionally, fuel oil prices decreased 18.6% year over year in May, following a 20.0% decline the previous month.

The electricity index (+1.0%) was the only energy component to post an increase on a year-over-year basis in May.

12-month change in the major components

Prices rose in seven of the eight major components on a year-over-year basis in May, with the rise in the CPI being led by higher prices for food. An increase in the recreation, education and reading index also contributed to higher consumer prices. The transportation index, which includes gasoline, recorded its seventh consecutive year-over-year decline.

Consumers paid 3.8% more for food in May compared with the same month a year earlier. Prices for food purchased from stores were up 4.1% in the 12 months to May. Higher meat prices contributed the most to the increase, despite posting a smaller year-over-year rise in May (+7.9%) than in April (+11.2%). In the 12 months to May, prices also rose for fresh vegetables (+5.8%), bakery products (+3.0%) and fresh fruit (+2.9%). Prices for food purchased from restaurants rose 2.9% year over year, their largest increase since December 2011.

The recreation, education, and reading index rose 1.9% on a year-over-year basis in May, after increasing 1.4% in April. Prices for traveller accommodation were up 7.5% in the 12 months to May, after rising 6.7% the previous month. At the same time, the travel tours index posted a smaller year-over-year decline in May (-0.3%) than in April (-3.9%).

Prices for clothing and footwear were up 0.5% in the 12 months to May, following a 1.3% rise the previous month. The smaller increase in May compared with April was largely attributable to prices for women’s clothing, which increased 0.4% on a year-over-year basis in May, following a 2.0% gain in April.

The transportation index declined 3.5% in the 12 months to May as gasoline prices remained lower than last year. In contrast, prices for the purchase of passenger vehicles increased 1.8% year over year in May, following a 1.4% rise the previous month.

12-month change in the provinces

Consumer prices rose in nine provinces in the 12 months to May, with Saskatchewan posting the largest increase. Prince Edward Island’s CPI registered its sixth consecutive year-over-year decrease. Every province recorded a year-over-year decline in its energy index.

Saskatchewan’s CPI rose 1.5% in the 12 months to May, after increasing 1.2% the previous month. In Saskatchewan, prices for natural gas remained higher than a year ago, while every other province posted year-over-year declines. In addition, Saskatchewan recorded a 3.4% rise in prices for the purchase of passenger vehicles, the second largest increase after Alberta (+3.5%). Conversely, Saskatchewan’s gasoline index decreased more than the national average on a year-over-year basis.

Consumer prices in British Columbia increased 0.8% in the 12 months to May, after rising 0.5% in April. This acceleration in price change was partly attributable to fresh vegetable prices, which were up 11.9% in May on a year-over-year basis, following a 4.8% increase the previous month.

In Manitoba, the CPI rose 0.5% year over year in May, after increasing 0.9% the previous month. This deceleration was partly attributable to clothing prices, which declined 0.2% in the 12 months to May, after increasing 7.6% in April.

Prince Edward Island’s CPI decreased 0.7% on a year-over-year basis in May, after declining 1.2% the previous month. Fuel oil prices fell 24.1% in the 12 months to May in the province, a larger decrease than at the national level. The basket weight of fuel oil is 10 times greater in Prince Edward Island than in Canada as a whole.

Seasonally adjusted monthly Consumer Price Index increases

On a seasonally adjusted monthly basis, the CPI increased 0.4% in May, following a 0.1% decrease in April.

Of the eight major components, seven increased on a seasonally adjusted monthly basis in May. The exception was the index for clothing and footwear, which declined 0.2%.

The largest increase in May was recorded in the seasonally adjusted recreation, education and reading index, which rose 0.8%. The seasonally adjusted index for transportation increased 0.5% in May, while the food index was up 0.4%.

Non-seasonally adjusted monthly Consumer Price Index increases

On a monthly basis and before seasonal adjustment, the CPI rose 0.6% in May, after decreasing 0.1% in April.

Consumer prices increased in all provinces on a monthly basis in May. Newfoundland and Labrador and New Brunswick both posted a 1.0% increase, the largest among the provinces. Manitoba (+0.2%) recorded the smallest monthly increase.

Bank of Canada’s core index

The Bank of Canada’s core index increased 2.2% in the 12 months to May, after rising 2.3% in April.

On a monthly basis and before seasonal adjustment, the core index rose 0.4% in May. This gain followed a 0.1% increase in April.

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

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