Analysis

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Consumer prices rose 3.3% in the 12 months to March, the largest year-over-year increase since September 2008. This advance follows a 2.2% increase in the 12 months to February.

Energy prices increased 12.8% during the 12 months to March, following a 10.6% increase in February. Gasoline prices increased 18.9% in March, following a 15.7% gain in the 12 months to February. Prices for fuel oil and other fuels increased 31.3%, while electricity prices rose 4.3%.

Excluding energy, the Consumer Price Index (CPI) rose 2.4% in the 12 months to March, following a 1.4% increase in February.

Prices for food purchased from stores rose 3.7% in March, the largest year-over-year advance since August 2009. This increase follows a 2.0% gain posted in February.

Other items that contributed significantly to the pickup in prices were travel services, clothing, and the purchase of passenger vehicles.

12-month change: Prices increase in all eight major components

On a year-over-year basis, prices increased in all major components of the CPI in March. Except for alcoholic beverages and tobacco products, prices rose at a faster rate in March than in February.

The largest increase occurred in the transportation component, where prices rose 6.6% in the 12 months to March, after advancing 5.1% in February.

In addition to higher gasoline prices, consumers paid more for passenger vehicle insurance premiums and for air transportation. Prices for the purchase of passenger vehicles rose 0.2% in the 12 months to March, following a 0.9% decrease the month before.

Food prices rose 3.3% in the 12 months to March, following a 2.1% rise in February. Prices for fresh vegetables rose 18.6%, as bad weather in Mexico and the southern U.S. reduced supply. The cost of meat rose 5.0% in March, as beef and pork prices increased. Higher prices were also recorded for bakery and cereal products as well as for dairy products.

Shelter costs rose 2.4% in March, after increasing 2.2% in February. In addition to higher prices for fuel oil and other fuels, as well as for electricity, homeowners' replacement cost increased 3.2% in the 12 months to March.

However, mortgage interest cost, which measures the change in the interest portion of payments on outstanding mortgage debt, and natural gas prices continued to decrease.

The recreation, education and reading price index increased 2.3% in the 12 months to March, after decreasing 0.3% in February. The difference can be mainly explained by traveller accommodation prices which increased 1.7% in March compared to the same month last year, after posting a 10.7% decline in February. The price decline in February was more the result of higher prices for hotel rooms in February 2010 during the Winter Olympics in Vancouver rather than recent price decreases.

Prices for household operations, furnishings and equipment advanced 1.9% between March 2010 and March 2011. Within this component, higher prices were recorded for child care and domestic services.

The health and personal care price index rose 2.6% in March, following a 2.0% increase in February. Consumers paid more for non-prescribed medicines, but less for prescribed medicines.

For alcoholic beverages and tobacco products, prices rose 2.5% in March with cigarette prices increasing 5.7%.

Prices for clothing and footwear rose 0.9% in the 12 months to March, the first year-over-year increase since November 2009. The advance follows a 2.0% decline posted in February. This year in March, fewer clothing items were on discount compared to the same month last year.

The provinces

Consumer prices rose at a faster rate in every province in March compared to February, year over year. Gasoline continued to be a major factor contributing to the increase in consumer prices in all provinces.

In the 12 months to March, Nova Scotia (+3.9%) posted the largest increase in consumer prices.

In Ontario, consumer prices rose 3.6% in the 12 months to March, after advancing 2.5% in February. Gasoline prices in Ontario rose 20.4% in March, following an 18.3% increase in February. Prices for food purchased from stores increased 3.6% in March, after advancing 1.8% in February. Higher prices were observed for fresh vegetables as well as for bakery products.

Consumer prices in Quebec increased 3.3% in the 12 months to March, following a 2.2% advance in February. Prices for gasoline rose 18.5% in March. Consumers paid 4.6% more for food purchased from stores in March, after paying 1.7% more in February. Prices rose for fresh vegetables, meat and dairy products.

Prices in British Columbia went up 3.1% in the 12 months to March, following a 1.8% increase in February. Much of the difference can be attributed to traveller accommodation, where prices decreased at a much slower rate in March (-3.1%) than they did in February (-38.1%), from a year earlier.

Drivers in British Columbia paid 16.3% more for gasoline in March compared with the same month in 2010. This rise follows a 12.6% increase in February. Consumers also paid more for food purchased from restaurants and electricity.

Non-seasonally adjusted monthly CPI continues to increase

Consumer prices, before seasonal adjustment, rose 1.1% in March, the largest monthly increase since January 1991. The March increase follows a 0.3% gain in February.

On a monthly basis, prices increased in seven of the eight major components in March. The only exception was for alcoholic beverages and tobacco products, where prices fell 0.1%.

Transportation costs increased 1.8% in March, after falling 0.2% in February. Gasoline prices advanced 6.6%, on the heels of a 0.6% increase in February. The cost of air transportation went up 2.5% in March, while prices for the purchase of passenger vehicles fell 0.5%.

Food prices increased 1.5% in March, after rising 0.3% in February. The March increase is the largest since November 2008. Price for food purchased from stores advanced 2.2%, after increasing 0.4% in February. Consumers paid more for fresh vegetables, non-alcoholic beverages, meat and dairy products.

Prices for clothing and footwear increased 5.6% in March. Consumers paid 11.5% more for women's clothing. Prices also increased for men's clothing and children's clothing.

The recreation, education and reading price index rose 1.1% in March. Within the index, prices rose for travel tours and sporting equipment.

Prices for both household operations, furnishings and equipment as well as health and personal care rose 0.3% from February to March.

At the provincial level in March, consumer prices rose at a faster rate than in February in all provinces except Alberta. Quebec recorded the largest increase (+1.4%) and Alberta the smallest (+0.2%). Large monthly price increases were also observed in Ontario and Nova Scotia.

Seasonally adjusted monthly CPI increases

On a seasonally adjusted monthly basis, consumer prices rose 0.8% from February to March, the largest increase since October 2010. The food index, which was up for the fourth consecutive month, rose 1.6% in March. The transportation index, which includes gasoline, advanced 0.6% in March, following a 0.3% increase in February and continuing its string of increases since July 2010.

Seasonally adjusted, the clothing and footwear index posted a monthly increase of 2.1% in March, after remaining unchanged in February. The recreation, education and reading index, which includes travel services, increased 0.5% in March, following a 0.2% advance in February. This marks the seventh straight monthly increase for this index.

The Bank of Canada's core index

The Bank of Canada's core index advanced 1.7% in the 12 months to March, following a 0.9% rise in February. The higher increase in March was mainly a result of larger price increases for travel services, clothing, and the purchase of passenger vehicles.

Month-over-month, the core index, before seasonal adjustment, rose 0.7% in March, after increasing 0.2% in February.

The seasonally adjusted monthly core index increased 0.5% in March, the largest increase since November 2008. The March increase follows a 0.1% decline in February.