Analysis

Consumer prices rose 1.8% in the 12 months to April, following a 1.4% increase in March.

Overall, energy prices rose 9.8% between April 2009 and April 2010, following a 5.8% increase during the 12-month period to March. Excluding energy, the Consumer Price Index (CPI) rose 1.1%, compared with a 1.0% increase in March.

Gasoline prices exerted the strongest upward pressure on the all-items CPI for the sixth consecutive month. In April, prices at the pump were 16.3% higher than they were in April 2009. This follows a 17.2% rise in the 12 months to March.

In addition, natural gas prices were no longer exerting significant downward pressure on the CPI. Prices for natural gas were 3.3% higher in April 2010 than they were a year earlier. This followed a 22.4% decline in the 12 months to March, and it was the first 12-month increase in natural gas prices in over a year.

Prices for the purchase of passenger vehicles also put upward pressure on the CPI for the fourth consecutive month in April. These prices increased 5.3%, following a 3.9% increase in March.

12-month change: Seven of the eight CPI components rise

Overall, seven of the eight major components of the CPI recorded price increases in the 12 months to April. The exception was clothing and footwear.

Transportation prices, which increased 6.2% in the 12 months to April, exerted the strongest upward pressure on the all-items CPI for the sixth consecutive month. In addition to higher gasoline and passenger vehicle prices, consumers paid 5.6% more for passenger vehicle insurance premiums in April than a year ago.

Shelter costs rose 0.8% during the 12-month period to April, after declining 0.7% in March. Household utilities, which include electricity, water, natural gas, and fuel oil and other fuels, exerted the most upward pressure on the index. Price increases were also observed for property taxes and homeowner’s replacement costs.

On the other hand, the mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, fell 6.1% in April, following a 6.0% decrease in March.

Food prices advanced 1.0%, following a 1.3% increase in March. April’s increase was the smallest since March 2008.

Upward pressure on the food index came largely from prices for food purchased from restaurants (+2.3%). Higher prices were also observed for sugar and confectionery and tomatoes. Prices fell for fresh fruit, meat, and bakery and cereal products.

Broad-based advances were observed in the health and personal care component, where prices were up 3.3%.

Prices for household operations, furnishings and equipment increased 1.1%, after a 1.4% increase in the 12 months to March. In April, the upward pressure on this index came primarily from higher prices for communications, other household goods and services, and child care and domestic services.

Prices increased 0.5% in the recreation, education and reading component in the 12 months to April. This follows a 0.7% rise between March 2009 and March 2010.

Prices for clothing and footwear fell 1.1%. The strongest downward pressure in this component came from lower prices for women’s, children’s, and men’s clothing. Prices for women’s and men’s footwear also recorded small declines.

The provinces

As was the case in the past three months, the largest year-over-year increases occurred in the four Atlantic provinces. On the other hand, Central Canada and three Western provinces posted higher 12-month price increases in April, compared with March.

In every province, the most significant upward pressure came from higher gasoline prices.

In Ontario, prices rose 2.2% in the 12 months to April. This was due primarily to higher prices for gasoline, passenger vehicle insurance premiums, and the purchase of passenger vehicles. Also, prices for natural gas increased 3.7% in April, after declining 36.3% in March. April’s increase was the first 12-month increase since March 2009.

Prices went up 2.1% in Saskatchewan in the 12 months to April, after increasing 1.1% in March. These higher price increases were attributable mainly to less downward pressure from natural gas prices. Prices for natural gas fell 5.6% in the 12 months to April, following a 26.1% decline in March.

In Alberta, prices rose 1.6%, following a 1.0% increase in March. Upward pressure came mainly from gasoline prices and the cost of purchasing passenger vehicles. In addition, there was less downward pressure from prices for electricity.

Prices in British Columbia rose 1.0% in April compared with the same month last year, after a 0.5% increase in March. This faster increase in April was due mainly to the turnaround in natural gas prices which rose 7.0% in the 12 months to April, compared with an 8.2% drop in March.

Month-over-month seasonally unadjusted CPI increases

Consumer prices prior to seasonal adjustment rose 0.3% in April, after remaining unchanged in March.

Seven of the eight major components of the CPI recorded month-over-month increases in April. The exception was food.

Monthly increases in the shelter index (+0.6%) were primarily driven by higher prices for natural gas, homeowner’s replacement costs, and prices for electricity. On the other hand, downward pressure from mortgage interest costs mitigated the overall increase in the shelter index.

Increases in the health and personal care index (+1.1%) were due mainly to upward price movements for dental care.

The cost of transportation rose 0.3% in April. Prices for inter-city transportation and the purchase of passenger vehicles exerted the most upward pressure on the index.

In contrast, food prices fell 0.2% due to month-over-month decline in prices for fresh fruit, non-alcoholic beverages, and bakery and cereal products.

Seasonally adjusted monthly CPI increases

On a seasonally adjusted monthly basis, the CPI rose 0.1% from March to April, after decreasing 0.1% from February to March. April’s increase was due mainly to a 0.6% rise in the shelter component. Higher prices for natural gas and homeowner’s replacement costs largely accounted for the upward movement within this index.

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

The Bank of Canada's core index advanced 1.9% over the 12 months to April, following a 1.7% rise in March. April’s increase was due primarily to a rise in prices for the purchase of passenger vehicles, passenger vehicle insurance premiums, property taxes, and food purchased from restaurants.

On a month-to-month basis, the core index prior to seasonal adjustment rose 0.3% in April, after posting a 0.2% decline in March.

The seasonally adjusted monthly core index rose 0.2% in April, following a 0.3% decline in March.