Post on 19-May-2015
Date: September 21, 2010 Canadian Consumer Price Index, August 2010 Results Source: Statistics Canada Link to Release: http://www.statcan.gc.ca/daily-quotidien/100921/dq100921a-eng.htm Summary: Canada’s Consumer Price Index (CPI) – the most commonly
quoted measure of price inflation – increased by 1.7 per cent year-over-year in
August after a 1.8 per cent annual increase in July. The August result was
driven largely by a five per cent rise in energy prices, but prices were higher for
seven of the eight major index components. The Bank of Canada’s Core CPI,
which strips out the most volatile components in the index, climbed 1.6 per
cent in August. The annual rate of inflation was highest in Ontario, where a 2.9
per cent increase in prices was experienced. The annual CPI increase in
Ontario was driven by higher prices for gas, electricity, passenger vehicle
insurance premiums and estimated homeowner's replacement costs.
Analysis: Annual growth in both the “All Items” and “Core” Consumer Price
Indices were below the Bank of Canada’s projection for the third quarter. With
this in mind, the latest CPI release adds fuel to the interest rate debate in
Canada. The calls for the Bank of Canada to halt interest rate hikes until we
have a better idea of the economic growth trajectory in Canada will likely
become louder. The argument will be that with inflation below the two per cent
target we are not experiencing strong upward pressure on consumer prices, so
there is no need to hike rates in order to slow spending. However, in recent
statements the Bank has argued that consumer and business spending is in
line with expectations. This suggests that the Bank may still be considering
further rate hikes this year and/or in 2011.
-2%
-1%
0%
1%
2%
3%
4%
Source: Statistics Canada
Canadian Consumer Price Index (CPI)Year-Over-Year Per Cent Change
CPI Annual Per Cent Change
Core CPI (Bank of Canada) Annual Per Cent Change
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Source: Statistics Canada
Canadian Gasoline Price (CPI Component)Year-Over-Year Per Cent Change
Written By:
Jason Mercer
TREB Senior Manager of Market Analysis.
jmercer@trebnet.com