Consumer Price Index

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Consumer prices rose 2.2% in May compared with May 2007, up from the 1.7% increase reported in April, as drivers faced significant increases in gasoline prices. The 0.5 percentage point acceleration in the all-items Consumer Price Index (CPI) was the sharpest since September 2007.

The 2.2% increase in May was the highest since January 2008, and was mostly a result of higher prices for gasoline, which rose 15.0% in May compared with the same month last year. This was considerably faster than the 12-month change of 11.6% posted in April. Excluding gasoline prices, the 12-month growth in May was 1.6%.

The Bank of Canada's core index, which is used to monitor the inflation control target, rose 1.5% between May 2007 and May 2008, identical to the 12-month increase posted in April. Lower prices for passenger vehicles dampened the upward pressure on the core index.

On a monthly basis, the seasonally adjusted all-items index rose 0.6% between April and May 2008, while the seasonally adjusted core index edged up 0.1%. The seasonally adjusted all-items rose 0.5% and the seasonally adjusted core index increased 0.4% between March and April.

The 0.6% monthly increase in the seasonally adjusted all-items index was the fastest rate of growth since January 2006. It reflects mainly the increase of gasoline prices.

12-month change: Strong acceleration due to gasoline prices

The acceleration in consumer prices in May was mainly a reflection of the 12-month increase in gasoline prices. This acceleration in gasoline prices occurred as crude oil prices almost doubled between May 2007 and May 2008. Gasoline prices increased substantially across the country, rising the most in Quebec and Ontario.

Higher mortgage interest costs were also a contributing factor to the rise in consumer prices in May. New housing prices continued to exert more upward pressure on this index than mortgage interest rates.

Prices for fuel oil and other fuels, which are products derived from crude oil, rose 49.3% in May compared with May 2007 — the fastest increase since March 2003. The highest 12-month increase in prices for fuel oil and other fuels was posted in Quebec (+60.4%).

Homeowner's replacement cost, which represents the cost of maintaining a housing structure, rose 4.0% in May. This was the weakest increase since April 2002.

Canadians paid 1.9% more in May for store-bought food items compared with the same month last year, up from the 0.9% increase posted in April.

Prices for bakery products increased 13.2%, the fastest 12-month rise since October 1981.

The 12-month price change for fresh vegetables continued to decline in May (-8.7%), but more slowly than in April (-17.3%). The appreciation of the Canadian dollar and the fact that supplies had been hit by frost in California in 2007 accounted in part for the decrease in prices for fresh vegetables. However, higher transportation costs for these commodities possibly alleviated the downward pressures to some extent.

Several components put downward pressure on the rate of growth in consumer prices. For example, the price to purchase and lease vehicles declined 8.1% between May 2007 and May 2008. The strong Canadian dollar and an increase in manufacturers' rebates on certain larger models of motor vehicles contributed to this decrease.

As was the case in April, the price of women's clothing fell 6.7% in May. The downward trend in prices for computer equipment and supplies continued, although the decrease was the smallest since August 2003.

Fastest price increases in Prince Edward Island

Consumers in Prince Edward Island faced the fastest increase in prices between May 2007 and May 2008. Prices rose 4.1% in the province during that period, a sharp increase from the 12-month change of 2.6% posted in April.

Rising energy prices contributed substantially to the 1.5 percentage-point acceleration in Prince Edward Island. This growth was due mainly to upward pressure from fuel oil, gasoline and electricity prices.

In Alberta, a rise in the price of natural gas was the main factor driving up consumer prices, which rose 3.7% in May.

The most moderate growth in consumer prices occurred in Manitoba (+1.6%) and Ontario (+1.8%).

For a more detailed analysis, consult the publication The Consumer Price Index.

Available on CANSIM: tables 326-0009, 326-0012, 326-0015 and 326-0020 to 326-0022.

Definitions, data sources and methods: survey number 2301.

More information about the concepts and use of the CPI are also available online in Your Guide to the Consumer Price Index (62-557-XIB, free) from the Publications module of our website.

The May 2008 issue of The Consumer Price Index, Vol. 87, no. 5 (62-001-XWE, free) is now available from the Publications module of our website. A paper copy is also available (62-001-XPE, $12/$111). A more detailed analysis of the CPI is available in this publication.

The June Consumer Price Index will be released on July 23.

For more information, or to enquire about the concepts, methods or data quality of this release, call Client Services (toll-free 1-866-230-2248; 613-951-9606; fax: 613-951-1539; prices-prix@statcan.gc.ca), Prices Division.

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