Analysis

Consumer prices rose 1.0% in the 12 months to June, following a 1.4% increase in May.

Overall, energy prices rose 1.3% between June 2009 and June 2010 after increasing 6.2% over the 12 months ending in May. Excluding energy, the Consumer Price Index (CPI) increased 0.9% in June, after posting a 1.0% increase in May.

The price of gasoline decreased 2.9% in June compared to the same month a year earlier, after rising 6.9% in May. This was the first year-over-year drop in prices at the pump since October 2009.

Natural gas prices increased 3.0% in June, after rising 4.7% in May. This was the third consecutive increase following several months of decline.

In June, electricity prices rose 5.8% after increasing 4.0% in May.

Prices for the purchase of passenger vehicles rose 2.8% in June, following a 5.1% increase in May.

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

Prices increased in seven of the eight major components of the CPI in the 12 months to June; the only exception was clothing and footwear.

Shelter costs rose 1.6% in the 12 months to June, after increasing 1.3% in May. Homeowner’s replacement costs rose 5.2% following a 4.4% increase in May. In addition to paying higher prices for natural gas and electricity, consumers also paid more for rent.

On the other hand, the mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, declined 5.0% in June, following a 5.4% decrease in May.

Despite the year-over-year decline in gasoline prices, transportation costs rose 1.0% in the 12 months to June after increasing 4.1% in May. In addition to paying higher prices for the purchase of passenger vehicles, consumers also paid 5.3% more for passenger vehicle insurance premiums.

Consumers paid 1.2% more for household operations, furnishings and equipment. This increase followed a 0.9% rise in the 12 months to May. Higher prices were recorded for telephone services and child care. Costs for financial services fell 2.8%.

Food prices went up 0.7% following a 0.8% increase in May. The increase in June was the smallest since March 2008. Prices for food purchased from restaurants rose 1.8% while prices for food purchased from stores increased 0.1%. Prices increased for sugar and confectionery, tomatoes and lettuce, while prices for oranges and potatoes fell.

Prices in the health and personal care component were up 1.7%. Prices for oral-hygiene products and dental care increased.

Prices in the recreation, education and reading component rose 0.4% after falling 0.2% in the 12 months to May. Consumers paid more for cablevision and satellite services. However, prices for video equipment and computer equipment and supplies fell.

Prices for clothing and footwear declined 1.8%. In this component, lower prices were recorded for women’s and children’s clothing.

The provinces

Apart from Manitoba, consumer prices rose in all provinces in the 12 months to June, but at a slower pace than in May 2010. Prices at the pump fell in most provinces.

The fastest rate of change occurred in Ontario where consumer prices rose 1.6%. Prices for the purchase of passenger vehicles were up as were passenger vehicle insurance premiums. Ontario consumers also paid more for electricity and telephone services.

In Manitoba, consumer prices decreased 0.2% in the 12 months to June, following a 0.5% increase in May. Lower prices for gasoline, natural gas and home and mortgage insurance were recorded in this province.

In British Columbia, prices advanced 0.5% in June, following a 0.6% increase in May. Electricity prices rose 21.7% while prices for home and mortgage insurance declined.

The non-seasonally adjusted monthly CPI decreases

In June, consumer prices prior to seasonal adjustment declined 0.1%, after increasing 0.3% from April to May.

The transportation component posted a 0.7% decrease and prices in the clothing and footwear component declined 3.2% in June.

On the other hand, five of the eight major components of the CPI registered month-to-month increases in June: recreation, education and reading; shelter; food; health and personal care; and alcoholic beverages and tobacco products.

In June, consumers paid 2.9% less at the pump for gasoline than in May. Prices also decreased for women’s and men’s clothing, passenger vehicles and non-alcoholic beverages.

The cost of shelter rose 0.2%. Month-over-month increases were observed in electricity prices and homeowner’s replacement costs.

The recreation, education and reading index rose 0.6% month-over-month in June. The price of traveller accommodation rose 7.6% between May and June.

Seasonally adjusted monthly CPI decreases

On a seasonally adjusted monthly basis, consumer prices fell 0.2% in June, the same rate of decrease as the previous month. Both the transportation and the clothing and footwear indexes fell 0.7% while food prices decreased 0.1%.

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

The Bank of Canada’s core index advanced 1.7% in the 12 months to June, following a 1.8% rise in May. Price increases were recorded for the purchase of passenger vehicles, passenger vehicle insurance premiums, homeowner’s replacement costs, electricity and telephone services.

On a month-to-month basis, the core index prior to seasonal adjustment fell 0.1%, after increasing 0.3% in May.

The seasonally adjusted monthly core index increased 0.1% in June, after increasing by the same amount in May.