Consumer Price Index

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Consumer prices slowed to 2.0% in the 12 months to November 2008, down from the 2.6% and 3.4% increases recorded in October and September respectively. The slowdown in November was due primarily to gasoline prices, which were 14.4% below November 2007 levels, and far offset increases for food and shelter items.

Excluding gasoline, the Consumer Price Index (CPI) rose 2.8% in the 12 months to November, up from the 2.0% rise recorded in October. This was the fastest pace of growth since May 2003. The jump was mainly attributable to smaller price declines for purchasing and leasing passenger vehicles, as well as higher food prices.

Chart 1
Growth slows in the all-items CPI while the all-items CPI excluding gasoline speeds up

The slowdown in consumer prices in November occurred in the wake of a slowing global economy and a depreciation of the Canadian dollar in relation to the US dollar. The Canadian dollar lost 20.6% against the US dollar in November 2008 compared with November 2007.

The 12-month decline in gasoline prices was the first since August 2007 and the largest since September 2006. On a monthly basis, gasoline prices fell 21.4% from October to November 2008.

The most significant individual contributors to November's 12-month increase in consumer prices were mortgage interest costs, natural gas prices and prices for various food items, particularly bakery and cereal products, as well as fresh vegetables.

Factors mitigating the overall increase, in addition to the drop in gasoline prices, included continuing price declines for purchasing and leasing passenger vehicles, women's clothing, and computer equipment and supplies.

On a seasonally adjusted monthly basis, consumer prices fell 0.3% from October to November, after falling 0.6% in the previous period.

12-month change: Food costs lead the way as major contributor to the growth in the CPI

Of the eight major components in the CPI, five recorded increases in the 12 months to November.

Chart 2
Transportation: Strong slowdown recorded

Rising food costs were the most dominant factor contributing to November's increase in consumer prices. Excluding food, the CPI advanced 0.9%.

Food prices gained momentum for the ninth consecutive month. Following a 12-month rise of 6.1% in October, food prices rose 7.4% in November, the largest increase since November 1986. Bakery and cereal product prices were up 12.9%, and fresh vegetables, which are largely imported, rose 28.9%.

Shelter costs, the second largest contributor, advanced 3.9% in November, a slightly faster rate than the 3.8% increase posted in October. Price increases for mortgage interest costs and natural gas were the largest upward contributors to the rise in the shelter component.

While mortgage interest costs were up 6.8%, their pace of growth has been slowing as a result of a slowdown in new housing prices, as well as easing interest rates.

Natural gas prices rose 16.8% in November. Increases were particularly strong in Nova Scotia (+28.5%), Ontario (+22.2%) and Saskatchewan (+21.2%).

Owing primarily to a sharp 14.4% drop in gasoline prices, the transportation price index declined 3.0% in November, its first decrease since August 2007 and the largest drop since September 2006.

Gasoline prices continued to decelerate in the wake of the global economic slowdown. The average price of a barrel of crude oil was reported at US$57.44 (CAN$69.97) in November 2008, compared with US$94.62 (CAN$91.51) in November 2007.

Chart 3
The gasoline price index continues to slide

Also contributing to the fall in transportation costs was a 2.7% decline in prices for purchasing and leasing passenger vehicles, compared with a 9.0% decrease in October.

In November of each year, models of automotive vehicles from the current year (2008) are replaced by new models (2009) in the CPI sample. As a result, the purchase and leasing of passenger vehicles price index in November reflected prices for 2009 vehicle models.

Increasing prices for passenger vehicle insurance (+4.2%) and air transportation (+6.8%) dampened the overall decline in transportation costs in November.

The clothing and footwear price index continued its downward trend, falling 2.4%, a slower decrease than the 2.8% drop recorded in October. A larger number of sales on clothing items was primarily responsible for the decrease.

The provinces: Growth in consumer prices slows in all provinces

The growth in consumer prices slowed in all 10 provinces in November, with the most pronounced slowdowns in two Atlantic provinces.

In Nova Scotia, prices rose on average 1.3% in the 12 months to November, compared with an increase of 3.4% in October. In Prince Edward Island, the growth slowed from 3.9% to 2.3%.

Chart 4
Consumer prices slow across the country

In almost every case, the slowdown was due to falling gasoline prices, which declined by as much as 17.1% in Nova Scotia and Ontario compared with November 2007.

Factors contributing to the rise in consumer prices varied considerably, but rising food prices were common across all provinces.

Bank of Canada's core index posts strong increase

The Bank of Canada's core index advanced 2.4% over the 12 months to November, a much higher rise than the 1.7% rate of growth posted in October. The increase was due primarily to smaller price decreases for purchasing and leasing passenger vehicles. In the 12 months to November, prices to purchase and lease passenger vehicles fell 2.7% compared with the more robust 12-month drop of 9.0% in October.

The seasonally adjusted monthly core index rose 0.5% from October to November, after posting no growth from September to October.

In November, the gap between the 0.3% month-over-month drop in the seasonally adjusted CPI and the 0.5% rise in the seasonally adjusted core index was attributable to gasoline, which pushed down the CPI, but which is not accounted for in the core measure.

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 offered online in Your Guide to the Consumer Price Index (62-557-XIB, free), available from the Publications module of our website.

The November 2008 issue of The Consumer Price Index, Vol. 87, no. 11 (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 December Consumer Price Index will be released on January 23, 2009.

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

Table 1
Consumer Price Index and major components

Table 2
Consumer Price Index by province, and for Whitehorse, Yellowknife and Iqaluit

Table 3
Consumer Price Index and major components