Analysis

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Consumer prices rose 1.6% in the 12 months to February, following a 1.9% increase in January.

Gasoline prices exerted the most upward pressure on the all-items Consumer Price Index (CPI) for the fourth consecutive month. In February, prices at the pump were 15.3% higher than they were in February 2009. This follows a 23.9% rise in the 12 months to January.

Prices at the pump in February 2009 were considerably lower than they were in late 2009 and early 2010. However, gasoline prices have been relatively stable since July 2009.

Overall, energy prices rose 4.0% between February 2009 and February 2010, following an 8.2% increase in the 12 months to January.

Excluding energy, the CPI rose 1.3% in the 12 months to February, matching the increase in January.

Prices for the purchase of passenger vehicles put upward pressure on the CPI for the second consecutive month in February.

As well, prices for traveller accommodation rose 16.0% in February, affected by the Winter Olympics.

12-month change: Six of the eight CPI components on rise

Six of the eight major components of the CPI recorded price increases in the 12 months to February. The exceptions were the shelter component, and clothing and footwear.

Prices in the transportation component continued to exert the strongest upward pressure on the all-items CPI, increasing 5.9%, following a 7.7% rise in January.

In addition to higher gasoline prices, consumers paid 7.9% more for passenger vehicle insurance premiums. As well, prices for the purchase of passenger vehicles rose 3.5% in February, following a 3.1% increase in January. Car manufacturers continued to offer rebates to consumers, but to a lesser extent than they did at the same time period last year.

Prices in the recreation, education and reading component increased 3.0% in the 12 months to February. Consumers paid more for traveller accommodation, cablevision and satellite services and purchase and operation of recreational vehicles. In contrast, prices fell for home entertainment equipment, parts and services and computer equipment and supplies.

Food prices advanced 1.2%, following a 1.4% increase in January.

Upward pressure on the food index came mainly from prices for food purchased from restaurants (+2.6%). Price increases were also observed for dairy products and eggs (+1.4%). On the other hand, prices fell for fresh vegetables, fresh fruit, and meat.

Prices for household operations, furnishings and equipment increased 1.8% in the 12 months to February. Upward pressure in this component came from prices for communications, other household goods and services, and child care and domestic services. Downward pressure came primarily from prices for furniture and household textiles and household appliances.

In the health and personal care component, prices rose 3.0% and were broad-based. Prices for personal care increased 3.2%, while prices for medicinal and pharmaceutical products rose 1.9%.

Shelter costs declined 1.1% in the 12 months to February, mostly the result of declines in mortgage interest cost and natural gas prices.

The mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, fell 5.8% in February, following a 5.5% decrease in January.

Upward pressure on the shelter component came from rent, cost of homeowners’ maintenance and repairs, and fuel oil and other fuels.

Prices for clothing and footwear fell 2.6%. The strongest downward pressure in this component came from prices for women’s and men’s clothing. Prices for children’s clothing also recorded a small decline in February.

Provinces: Slower price increases in most provinces

Growth in consumer prices slowed in all provinces except British Columbia between February 2009 and February 2010. In British Columbia, consumer prices rose 1.2%, compared with the 12-month increase of 0.7% in January.

As was the case in January, the largest year-over-year increases occurred in Atlantic Canada: New Brunswick, Prince Edward Island, Newfoundland and Labrador, and Nova Scotia.

Higher price rises in Atlantic Canada were partly attributable to larger upward movements in gasoline prices.

As well, prices for fuel oil and other fuels advanced 11.7% nationally in the 12 months to February, the largest increase since October 2008. These energy products are widely used in home heating in Atlantic Canada, while the rest of the country relies mostly on electricity and natural gas.

In Ontario, prices rose 1.8%. This was due primarily to higher prices for gasoline, passenger vehicle insurance, and the purchase of passenger vehicles. Downward pressure came mainly from the shelter and clothing and footwear indexes.

In Alberta, consumer prices went up 1.0%. Major contributors to higher prices were the cost of traveller accommodation and gasoline.

Prices in British Columbia rose due mainly to higher prices for traveller accommodation (+64.1%) and gasoline (+12.8%).

With the Winter Olympics, Canadians who travelled to Vancouver in February paid more for their hotel rooms, compared with the same month of last year.

The recreation, education and reading index rose 7.4% in the 12 months to February, which was the largest contributor to the increase in the CPI for British Columbia. On the other hand, cost of shelter was the most significant downward contributor in that province.

Month-over-month seasonally unadjusted CPI increases

Consumer prices prior to seasonal adjustment increased 0.4% in February, after increasing 0.3% in January.

Five of eight major components of the CPI recorded month-over-month increases in February: recreation, education and reading; clothing and footwear; food; household operations, furnishings and equipment; and alcoholic beverages and tobacco products.

Monthly increases in the recreation, education and reading index (+3.0%) were driven by travel services (+17.9%), where prices for traveller accommodation and travel tours increased 18.6% and 17.3%, respectively.

The clothing and footwear index rose 1.2% in February. Major contributors to the increase were men’s, children’s, and women’s clothing.

Food prices went up 0.3% in the wake of month-over-month increases in prices for dairy products and eggs and meat. On the other hand, price declines in fresh fruit and fresh vegetables mitigated the overall increase in the food index.

Increases in the household operations, furnishings and equipment index (+0.4%) were mainly due to upward price movements for furniture and household textiles and child care.

In contrast, transportation (-0.4%) exerted the most downward pressure on the monthly CPI. Gasoline prices (-1.7%) were the most significant downward contributor to the decline.

Shelter costs remained unchanged from January to February.

Seasonally adjusted monthly CPI increases

On a seasonally adjusted monthly basis, the CPI rose 0.1% from January to February, after increasing 0.4% from December to January. February’s increase was due mainly to a 1.8% rise in the recreation, education and reading component. Price increases for traveller accommodation largely accounted for the upward movement within this component.

12-month change in the Bank of Canada’s core index

The Bank of Canada's core index advanced 2.1% over the 12 months to February, following a 2.0% rise in January.

February’s increase was due primarily to price increases for passenger vehicles, as well as for traveller accommodation affected by the Olympics.

On a month-to-month basis, the core index prior to seasonal adjustment increased 0.7% from January to February.

The seasonally adjusted monthly core index went up 0.3% in February, matching the increase in January.