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Tuesday, September 23, 2003 Consumer Price IndexAugust 2003The 12-month increase in the Consumer Price Index (CPI) eased to 2.0% in August from 2.2% in July. August's 12-month increase was well below the recent peak reached in February and was the lowest since July 2002. Excluding energy, the CPI advanced 1.6% from August 2002 to August 2003, after rising 1.8% in July. Automotive vehicle insurance premiums, as well as natural gas and gasoline prices were primarily responsible for the 12-month increase in the All-items CPI. Homeowners' replacement cost, last September's tuition fees, homeowners' insurance premiums, and prices for cigarettes and food purchased from restaurants also contributed to the 12-month increase. Insurance premiums for automotive vehicles rose 21.8% from August 2002 to August 2003. Most of this increase occurred in the first half of the 12-month period. The industry cites rising health care costs, larger claim payouts, fraud and falling returns on its investments as contributing factors. The natural gas index was 51.4% higher than in August 2002, mostly the result of higher prices in Ontario (+49.5%) and the effects of a payment to Northern Alberta customers following the sale of a gas field last year. The natural gas index for Alberta was lowered by this payment between March and September 2002. A substantial monthly increase (+9.0%) left gasoline prices 6.3% higher than in August 2002. A 12-month decrease in electricity prices (-8.4%) had a small moderating effect on the CPI's 12-month increase. Downward pressure also came from lower prices for traveller accommodation, automotive vehicles and beef. Traveller accommodation prices were 13.6% below last August's levels as the tourism industry continued to face the effects of a higher Canadian dollar, the severe acute respiratory syndrome (SARS) epidemic and a general economic slowdown. Prices for purchased automotive vehicles fell 1.9% in August 2003 compared to August 2002 as manufacturers continued to offer additional incentives. Beef prices were down 9.5%, the result of trade restrictions on Canadian beef by the United States and other countries. The CPI continued its slow moving upward trendAfter three consecutive monthly increases of 0.1%, the CPI continued its slow-moving upward trend, rising 0.2% from July to August. A 9.0% increase in the price of gasoline accounted for nearly all of the upward pressure on the index. This upward pressure was almost entirely offset by price decreases for fresh vegetables, automotive vehicle purchases and beef. Gasoline prices rose on average 9.0% between July and August. This was the highest monthly advance since March 2002. Gasoline prices were up in all provinces and increases ranged from a low of 2.7% in Newfoundland and Labrador to a high of 11.1% in both British Columbia and Ontario. Increases were due to reduced gasoline inventories in the United States and high summer demand. Consumers paid 12.1% less for fresh vegetables, as more locally grown produce became available. Prices for purchased automotive vehicles were down 0.8% in August, following decreases in June and July. Automotive vehicle manufacturers continue to push sales by offering incentives. The index for the purchase of automotive vehicles has fallen 4.4% since the beginning of 2003. Beef prices fell for the fourth consecutive month, decreasing 8.3% in August. Since May, prices have dropped 13.9% and are now at their lowest levels since January 2001. Price reductions were primarily the result of trade restrictions on Canadian beef by the United States and other countries, following the May 20 discovery of a case of bovine spongiform encephalopathy (BSE) in Alberta. Price declines were seen in Western and Central Canada while most Maritime Provinces showed increases. The seasonally adjusted CPI increased between July and AugustAfter adjusting the CPI to remove seasonal influences, the All-items CPI showed a 0.3% rise from July to August. This increase is attributable to the rise in the seasonally adjusted indexes for transportation (+1.8%), alcoholic beverages and tobacco products (+0.4%), health and personal care (+0.3%), shelter (+0.1%), recreation, education and reading (+0.1%), and household operations and furnishings (+0.1). These increases were partly offset by the decrease in the seasonally adjusted index for clothing and footwear (-0.3%). The index for food was unchanged after seasonal adjustment. All-items excluding the eight most volatile componentsThe All-items index excluding the eight most volatile components as defined by the Bank of Canada rose 1.5% from August 2002 to August 2003. This follows a 12-month increase of 1.8% in July. The main contributors to August's rise were higher automotive vehicle insurance premiums (+21.8%) and homeowners' replacement cost (+6.2%), as well as the increase in tuition fees (+4.8%) registered last September. The All-items index excluding the eight most volatile components as defined by the Bank of Canada increased 0.2% from July to August. Most of the upward pressure came from higher automotive vehicle insurance premiums. Downward pressure came from lower automotive vehicle purchase costs and beef prices. On a seasonally adjusted basis, the index remained unchanged from July to August. EnergyConsumers paid 7.6% more for energy in August 2003 than in August 2002. Most of this increase is attributable to the rise in the price of natural gas (+51.4%) and gasoline (+6.3%). Higher prices for fuel oil (+10.5%) also contributed to the increase, while lower prices for electricity (-8.4%) exerted some moderating downward pressure. In August, energy prices were 4.3% higher than the previous month. This increase was due to higher gasoline prices (+9.0%) and, to a much lesser extent, higher prices for electricity (+0.3%). Lower natural gas prices (-1.1%) exerted some modest downward pressure. Available on CANSIM: tables 326-0001, 326-0002, 326-0009, 326-0012, 326-0016, 326-0017 and 326-0018. Definitions, data sources and methods: survey number 2301. Available at 7 a.m. on Statistics Canada's website. From the home page, choose Today's news releases from The Daily, then Latest Consumer Price Index. The August 2003 issue of the Consumer Price Index (62-001-XIB, $8/$77; 62-001-XPB, $11/$103) is now available. The September Consumer Price Index will be released on October 21. For more information, or to enquire about the concepts, methods or data quality of this release, call Rebecca McDougall (1-866-230-2248; 613-951-9606; fax: 613-951-1539; infounit@statcan.gc.ca) or Joanne Moreau (613-951-7130), Prices Division.
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