Analysis

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Consumer prices rose 1.5% in the 12 months to June, following a 1.2% gain in May. The increase in the Consumer Price Index (CPI) was led by higher prices for the purchase of passenger vehicles and, to a lesser extent, for electricity.

Prices for the purchase of passenger vehicles increased 3.9% year-over-year in June, after rising 1.7% the previous month. The June increase was the result of less discounting by manufacturers compared with June 2011.

The cost of electricity rose 5.9% year-over-year in June, mostly attributable to increases in Ontario, Alberta and British Columbia.

Despite the increase in electricity prices, the energy index declined 0.8% in the 12 months to June following a 1.6% decrease in May. Gasoline prices fell 1.8% after declining 2.3% in May. Prices for natural gas also declined in the 12 months to June, although at a slower rate than in the previous month.

Excluding energy, the CPI increased 1.7% in the 12 months to June. While this matched the year-over-year change recorded in May, it continued to increase at a faster rate than the All-items CPI.

12-month change in the major components

The 1.5% increase in the June CPI was led by year-over-year price gains for shelter and transportation. Prices rose at a faster rate in five of the eight major components in June compared with May.

Shelter costs advanced 1.3% in the 12 months to June. In addition to price increases for electricity, homeowners' replacement cost rose 2.1% and rent went up 1.3%. Conversely, natural gas prices and mortgage interest cost declined year-over-year in June.

Prices for transportation increased 1.7% year-over-year in June after rising 0.8% in May. In addition to higher costs for the purchase of passenger vehicles, drivers also paid more in passenger vehicle insurance premiums. In contrast, prices for gasoline decreased in the 12 months to June.

The cost of food rose 2.0% between June 2011 and June 2012, following a 2.5% increase in May. The year-over-year price change for food purchased from stores eased to 1.8% in June from 2.5% in May. This was led by slower price increases for meat. Prices for food purchased from restaurants continued to increase.

12-month change in the provinces

Consumer prices rose in every province in the 12 months to June. Price increases for the purchase of passenger vehicles were a factor in all provinces.

The Ontario CPI (+1.2%) increased the least of all provinces in the 12 months to June. Prices for food purchased from stores rose 1.0%, the smallest year-over-year gain among the provinces. This was largely the result of easing prices for meat. At the same time, Ontario consumers paid 5.0% less for gasoline, the largest year-over-year decline recorded of all provinces.

Prices in Alberta rose 1.3% in the 12 months to June, following a 0.4% increase in the previous month. This faster rate of growth was led by gasoline prices, which advanced 0.5% year-over-year in June, after declining 6.6% in May. Smaller price declines for natural gas were also a factor.

Seasonally adjusted monthly CPI decreases

On a seasonally adjusted monthly basis, the CPI declined 0.2% in June, after decreasing 0.3% the previous month. These monthly declines have brought the seasonally adjusted index to a level just below what it was in January.

The seasonally adjusted index for transportation fell 1.2% in June following a 1.8% decline in May. The food index declined 0.2% after rising 0.4% the previous month.

The index for alcoholic beverages and tobacco products also decreased in June, while the clothing and footwear index was unchanged. The indexes for all other major components increased on a seasonally adjusted basis in June.

Non-seasonally adjusted monthly CPI declines

On a monthly basis and before seasonal adjustment, the CPI fell 0.4% in June, led by price declines for transportation. This followed a 0.1% decrease in May.

The cost of transportation fell 1.8% in June as consumers paid less for gasoline (-3.2%) and for the purchase of passenger vehicles (-2.7%). Conversely, prices for rental of passenger vehicles and parking fees increased from May to June.

At the provincial level, prices fell in every province except for Alberta. The Alberta CPI rose 0.2% in June led by price gains for natural gas. Alberta was also the only province where gasoline prices did not decrease, posting no change from May to June.

Bank of Canada's core index

The Bank of Canada's core index rose 2.0% in the 12 months to June, following a 1.8% gain in May. Price increases for the purchase of passenger vehicles and electricity were main contributors to the year-over-year increase in the core index.

On a month-to-month basis and before seasonal adjustment, the core index fell 0.4% in June, following a 0.2% increase in May.

On a monthly basis, the seasonally adjusted core index rose 0.1% in June, after declining 0.1% in May.