Analysis

View the most recent version.

Consumer prices rose 2.4% in the 12 months to December, following the 2.0% increase posted in November. The 0.4 percentage point increase was mainly due to higher gasoline prices.

Between December 2009 and December 2010, gasoline prices increased 13.0%, after increasing 7.2% in the 12 months to November. Excluding gasoline, the Consumer Price Index (CPI) rose 1.8% in December, identical to the increase recorded in November.

In addition to paying more for gasoline, consumers paid 6.2% more for electricity and 9.2% more for natural gas in December. Overall, energy prices rose 10.5% during the 12 months to December.

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

12-month change: Increase in seven of the eight major components

The largest increase occurred in the transportation component where prices rose 4.9% in the 12 months to December, after posting an increase of 4.6% in November.

In addition to December's higher gasoline prices, consumers paid 4.3% more for passenger vehicle insurance premiums and 1.5% more for the purchase of passenger vehicles.

Shelter costs rose 2.7% in December, following a 2.6% rise in the 12 months to November. In addition to higher prices for electricity and natural gas, homeowners' replacement cost increased 4.3%.

However, the mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, declined 2.5% in the 12 months leading to December, after falling 2.7% in November.

Food prices rose 1.7% in December compared to the same month last year, following a 1.5% increase in November. Prices for food purchased from restaurants increased 2.4% in December. Consumers also paid more for meat as well as sugar and confectionary.

Prices for household operations, furnishings and equipment increased 1.7% between December 2009 and December 2010, on the heels of a 0.9% increase in November. Within this component, prices rose for telephone services and child care.

The recreation, education and reading price index went up 1.1% in December, after increasing 0.6% in the previous month. Prices for cablevision and satellite services rose 5.4%. Prices for the use of recreational facilities and services also increased, while prices for computer equipment and supplies declined.

The health and personal care index increased 2.3% in December compared with a 2.2% increase in November.

Prices for clothing and footwear declined 2.0% in December, following a 3.2% decrease in November. Prices for women's clothing fell 5.3%.

The provinces

Consumer prices increased in every province between December 2009 and December 2010. In all provinces except Saskatchewan, prices increased at a faster rate on a year-over-year basis than they did in November.

In every province except Manitoba, the main factor behind the increase in consumer prices was gasoline. Drivers faced double-digit increases in six provinces: Nova Scotia, Quebec, Ontario, Saskatchewan, Alberta and British Columbia.

Prices in Ontario rose 3.3% in the 12 months to December, after increasing 3.0% in November. Gasoline prices in Ontario rose 16.0% in December, following the 10.6% increase posted the month before. Electricity prices, passenger vehicle insurance premiums, and homeowners' replacement cost also increased.

In Quebec, consumer prices increased 1.6% on the heels of a 1.1% rise in November. Prices for gasoline increased 13.8% in December, after rising 9.0% the previous month. A rise in passenger vehicle insurance premiums was also recorded.

Prices in British Columbia increased 2.4% after rising 2.2% in November. Gasoline prices were up 10.6%, following the 6.9% increase posted in November. Consumers in British Columbia also paid more for food purchased from restaurants.

In Alberta, prices rose 0.8%, following the 0.1% increase recorded in November. Gasoline prices in Alberta rose 10.2% in December, after increasing 0.3% the month before. Prices for homeowners' home and mortgage insurance were also up.

No change in non-seasonally adjusted monthly CPI

Consumer prices before seasonal adjustment remained unchanged in December, after rising 0.1% in November.

On a monthly basis, prices fell in four of the eight major components of the CPI in December: clothing and footwear; recreation, education and reading; household operations, furnishings and equipment; and health and personal care.

Prices for clothing and footwear fell 3.6%, after declining 3.0% in November. Consumers paid 5.0% less for women's clothing. Prices for men's clothing and children's clothing also fell.

Recreation, education and reading costs dropped 0.4% in December. Prices for traveller accommodation decreased 1.8%; prices for video equipment also fell.

In the household operations, furnishings and equipment component, prices decreased 0.2% on the heels of a 0.2% increase the previous month.

Food prices rose 0.5% in December, matching the increase posted in November. Consumers paid higher prices for fresh vegetables and meat.

Transportation costs increased 0.4%, after rising 1.8% in November. Prices for gasoline rose 2.3% in December, following a 1.7% increase the month before.

Shelter costs rose 0.2% in December, after dropping 0.2% in the previous month. Prices for electricity increased 0.8%.

At the provincial level, consumer prices decreased or remained unchanged in every province except in Quebec and Alberta.

On a monthly basis, from November to December, the largest decrease in consumer prices (-0.5%) was recorded in Prince Edward Island. Prices in Alberta increased 0.2% in December as consumers paid more for gasoline, electricity, and natural gas.

Seasonally adjusted monthly CPI increases

On a seasonally adjusted monthly basis, consumer prices rose 0.3% from November to December, after increasing 0.2% between October and November. The transportation index, which includes gasoline, advanced 0.4%, while the shelter index increased 0.2% and the food index increased 0.3%. Increases were also recorded for the clothing and footwear index, the recreation, education and reading index and the health and personal care index.

Bank of Canada's core index

The Bank of Canada's core index advanced 1.5% in the 12 months to December, following a 1.4% rise in November.

On a month-over-month basis, the core index prior to seasonal adjustment decreased 0.3% in December after posting no change in November.

The seasonally adjusted monthly core index rose 0.2% from November to December after holding steady the previous month.

Annual Review of the 2010 Consumer Price Index

This following section examines the annual average movement in components of the Consumer Price Index (CPI) for 2010 as a whole. Annual average indexes are obtained by calculating the average of the index values over the calendar year. Annual averages should not be confused with the 12-month change in the CPI, which compares indexes for a given month to indexes for the same month a year earlier.

Gasoline prices fuel faster growth in CPI in 2010

In 2010, prices for many of the major contributors to changes in the CPI rebounded after falling in 2009 during the economic downturn. This was particularly the case for the transportation, energy and shelter aggregates.

For 2010 as a whole, consumer prices in Canada rose 1.8%, much faster than the 0.3% increase in 2009.

The faster growth was largely attributable to a rebound in energy and passenger vehicle prices. The single most important factor in 2010 was the increase in the price of gasoline.

Energy prices rose 6.7% in 2010, following a 13.5% decline in 2009. Prices for gasoline increased 9.1%, after falling 17.5% the year before. Electricity prices increased 4.8% following a 1.8% rise in 2009. Natural gas prices declined 1.8%, a much slower rate than the 20.1% decline in 2009.

Prices for the purchase of passenger vehicles rose 3.5% in 2010, after falling 5.9% in 2009 and 6.9% in 2008.

On an annual basis, the Bank of Canada core index increased 1.8%, following a 1.7% increase recorded in 2009.

Annual change in 2010: Increase in seven of the eight major components

For 2010 as a whole, prices increased in seven of the eight major components of the Consumer Price Index. The exception was clothing and footwear.

Prices rebounded in the transportation and shelter components, rising in 2010 after declining in 2009, driven by price increases for energy and passenger vehicles. Transportation and shelter combined account for just over 45% of the total weight of the CPI basket of goods and services.

Transportation costs were up 4.3% in 2010, after falling 5.4% the year before. The increase was primarily the result of higher gasoline and passenger vehicle prices.

Shelter costs rose 1.4%, following a 0.3% decrease in 2009. Property taxes increased 4.1%. In addition to higher electricity prices, homeowners' replacement cost increased 3.7%, after decreasing 2.6% in 2009. However, mortgage interest costs declined 4.4% in 2010, after increasing 0.3% the previous year.

Price pressures abated in five of the six remaining CPI major components compared with 2009. These components were: food; household operations, furnishings and equipment; clothing and footwear; health and personal care; and alcoholic beverages and tobacco products.

Food prices rose 1.4%, following a 4.9% rise in 2009. Prices for food purchased from stores rose 1.0%, significantly slower than the 5.5% increase in 2009. The smaller increase in food prices can be largely explained by falling prices for fresh fruits and vegetables, which declined 2.7% after rising 8.1% in 2009, and by softer price increases for meat as well as for bakery and cereal products.

Prices for clothing and footwear fell 1.9% in 2010, following a 0.4% decline in 2009. It was the ninth consecutive year in which the price index for this component has decreased.