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The Daily. Wednesday, March 21, 2001

Consumer Price Index

Canadians paid 2.9% more in February than they did in February 2000 for the goods and services included in the Consumer Price Index (CPI) basket. This compares with a 3.0% year-over-year rise in January and a 3.2% advance in December. Higher prices for food and energy were the major contributors to the upward pressure on the CPI, accounting for almost half the annual increase in February 2001. Excluding the impact of energy prices, the CPI rose by 2.4% in February, the highest 12-month advance since October 1995.

While price increases were widespread among the food components, more than half the total rise in the food index can be attributed to fresh vegetables, beef and restaurant meals. Although higher energy costs are stated as a factor explaining part of the wholesale price increases in the food industry, their impact is hard to assess given the competitiveness of the retail food sector. Bad weather this winter in southern growing regions was also a factor that contributed to pushing the fresh vegetables index up 21.6% over the 12 months ending in February 2001. Tight supplies were the main factor behind the 14.5% jump in the beef index over the same period, the biggest 12-month advance posted since February 1980.

Energy prices rose an average 6.4% from February 2000 to February 2001, the smallest increase since July 1999. An 8.1% drop in the electricity index moderated the impact of higher prices for natural gas, gasoline and fuel oil. The decline in the electricity index was largely due to a $200 rebate given to ratepayers by the British Columbia government in February, effectively reducing the average provincial electricity bill to zero for that month. However, natural gas prices climbed 35.0% in February, the eighth consecutive month in which annual increases in the natural gas index exceeded 20.0%. Gasoline prices advanced 7.9% over the same 12 months, and the price of fuel oil rose 3.1%.

Higher mortgage interest cost was also an important contributor to the overall 12-month increase in the CPI. However, lower prices for the purchase of automotive vehicles, computer equipment and supplies, and video equipment exerted some downward pressure on the All-items CPI.

From January to February, the CPI rose 0.4% after declining 0.3% from December 2000 to January 2001. This increase is largely attributable to higher prices for natural gas, travel tours, and clothing. In contrast, lower prices for electricity, fuel oil and automotive vehicle insurance premiums exerted a dampening effect on the All-items increase.

Natural gas prices increased an average 7.6% from January to February, following a 6.5% decrease in January. The largest part of this rise came from an 89.1% advance in the index for Alberta resulting from a rate increase. Manitoba saw a sizeable increase, 26.2%, while the indexes for Ontario, Saskatchewan and British Columbia were unchanged. The only decrease (-2.8%) was in Quebec.

The prices of travel tour packages rose in February from January, as they usually do at this time of the year. The 11.8% advance was mainly the result of higher demand in February, the first month of the two-month peak tourist season (February and March) for southern destinations.

Clothing prices increased an average 2.0% in February. Higher prices were posted for all major categories of clothing. This was due to a combination of price increases and returns to regular prices following sale prices.

The price index for electricity fell 7.4% in February. The largest contributor to this decline was a 100.0% decrease in the British Columbia index, the result of a credit rebate introduced by the British Columbia government. This credit rebate negated the impact of a 53.5% hike in the index for electricity in Alberta. The increase in the Alberta index is the result of many households facing rate increases that came into effect in February.

The 4.0% decrease in the price of fuel oil in February was largely due to lower wholesale prices and lower crude oil prices. Declines were registered for all provinces except Manitoba which showed a slight increase of 0.3%.

The index for automotive insurance premiums decreased 0.8% in February. This decline was primarily due to an 8.0% index decrease in British Columbia. The provincial decrease was the result of a one-time rebate program offered by the Insurance Corporation of British Columbia. The rebates were pro-rated according to the number of years of accident-free driving, with a maximum rebate of $100.

Note: The government of British Columbia provided BC Hydro customers with a $200 credit on their February 2001 electricity bill. For total bills that are smaller than the credited amount, the unused credit is to be applied to the next payment. As the average electricity bill for February in British Columbia is less than $200, the average consumer made no payment. As a consequence, the index for electricity for British Columbia fell to 0.0. The index series (1992=100) will be re-established to the level reflecting the resumption of payments in March 2001. It will not be meaningful, however, to calculate a percentage change comparing any future time period to the index of February 2001, as it implies a division by zero.

Available on CANSIM: matrices 9940-9970.

Available at 7 a.m. on Statistics Canada's Web site (www.statcan.ca).

The February 2001 issue of the Consumer Price Index (62-001-XIB, $8/$77; 62-001-XPB, $11/$103) is now available. See How to order products.

March's Consumer Price Index will be released on April 20.

For more information, or to enquire about the concepts, methods or data quality of this release, call (613-951-9606; fax: 613-951-1539; infounit@statcan.gc.ca), Prices Division.

Consumer Price Index and major components

(1992=100)

Consumer Price Index for the provinces, Whitehorse and Yellowknife

(1992=100)