Analysis

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The Consumer Price Index (CPI) rose 0.8% in the 12 months to December, matching the increase in November.

12-month change in the major components

Consumer prices rose in all major components in the 12 months to December.

Food prices increased 1.5% on a year-over-year basis in December following a 1.7% increase in November. Consumers paid 2.2% more for food purchased from restaurants and 4.4% more for meat. In contrast, prices declined 5.8% for fresh vegetables.

Prices for household operations, furnishings and equipment increased 1.3% year over year in December as consumers paid 4.2% more for financial services.

Shelter costs increased 0.6% in the 12 months to December after rising 1.0% in November. Rent and homeowners' replacement cost increased on a year-over-year basis. Conversely, mortgage interest cost and natural gas prices declined.

Prices for transportation increased 0.5% in the 12 months to December, after decreasing 0.2% in November. Gasoline prices rose 1.0% on a year-over-year basis in December compared with a 0.4% increase in November. Prices for the purchase of passenger vehicles fell 0.6% in the 12 months to December after decreasing 1.8% in November.

12-month change in the provinces

Consumer prices rose in all provinces in the 12 months to December, except Alberta which posted no change in its All-items CPI. The largest increase occurred in Nova Scotia.

Consumer prices in Nova Scotia increased 1.8% on a year-over-year basis in December, after rising 1.2% in November. Nova Scotia posted the largest year-over-year price increase among the provinces for electricity, homeowners' home and mortgage insurance, and clothing.

The All-items CPI in Alberta posted no change in the 12 months to December following a 0.6% increase in the previous month. Alberta was the only province to post a year-over-year price decrease for electricity.

Prices in British Columbia rose 0.4% year over year in December, compared to a 0.1% increase in November. Smaller year-over-year price decreases for gasoline were observed in December compared with November.

Seasonally adjusted monthly CPI decreases

On a seasonally adjusted monthly basis, the CPI decreased 0.1% in December after decreasing 0.2% in November.

Five of the eight major components posted no price change in December, while the indexes for clothing and footwear, and health and personal care edged up. The seasonally adjusted index for transportation declined 0.3% in December following a 1.2% decrease in November.

Non-seasonally adjusted monthly CPI decreases

On a monthly basis and before seasonal adjustment, the CPI fell 0.6% in December, after falling 0.2% in November.

The December CPI was led by a 2.4% monthly price decrease for gasoline.

Prices for transportation fell 1.2% in December after decreasing 1.0% in November. In addition to the decline in gasoline prices, consumers paid 1.2% less for the purchase of passenger vehicles in December after paying 1.4% more in November.

Prices for clothing and footwear fell 3.6% in December led by price decreases for women's clothing (-4.8%) and men's clothing (-3.4%).

The cost for recreation, education and reading decreased 0.8% in December following a 0.5% decrease in November. Prices for traveller accommodation fell 5.3% in December.

On a provincial basis, consumer prices fell in all provinces in December, with the largest decline in Saskatchewan (-1.0%).

Bank of Canada's core index

The Bank of Canada's core index rose 1.1% in the 12 months to December, following an increase of 1.2% in November.

On a month-to-month basis and before seasonal adjustment, the core index decreased 0.6% in December after posting no change in November.

On a monthly basis, the seasonally adjusted core index increased 0.1% in December after registering no change in November.

Annual Review of the 2012 Consumer Price Index

The following section examines the annual average movement in the components of the Consumer Price Index (CPI) for 2012 as a whole. Annual average indexes are obtained by calculating the average of the monthly index values over the calendar year. Annual average percentage changes 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.

Slower price increases for gasoline and food lead to a smaller rise inthe CPI in 2012

In 2012, the annual average increase in consumer prices was 1.5%. This followed a 2.9% rise in 2011 and a 1.8% rise in 2010. The 2012 increase in the CPI was the lowest since 2009, when prices increased 0.3%. The average of the annual increases in the CPI since 1992 was 1.8%.

The slower increase in the CPI in 2012 compared with 2011 was largely attributable to smaller price increases for gasoline and food.

Gasoline prices increased 2.5% in 2012 following gains of 20.0% in 2011 and 9.1% in 2010. On a provincial basis, gasoline prices rose more in 2012 in the East than in the West, to some extent reflecting the divergence between the West Texas Intermediate (WTI) and Brent crude oil benchmarks.

Food prices rose 2.4% on average in 2012 after increasing 3.7% in 2011 and 1.4% in 2010. The slower increase in 2012 compared with 2011 was led by smaller price gains for food purchased from stores. In 2012, price increases were recorded for food purchased from restaurants (+2.4%) and meat (+5.3%). Conversely, prices for fresh vegetables declined 5.0% in 2012.

Annual change: Prices up in all eight major components

In 2012, prices increased in all of the major components of the CPI. Every major component posted a smaller price increase in 2012 compared to 2011, except for household operations, furnishings and equipment which increased at the same rate.

The cost of transportation went up 2.0% on average in 2012 compared with the 6.4% increase recorded in 2011. While gasoline prices decelerated between 2012 and 2011, prices for the purchase of passenger vehicles rose at a faster rate, up 1.4% in 2012 after increasing 0.2% in 2011.

Shelter costs rose 1.2% in 2012, following a 1.9% increase in 2011. Consumers paid 10.3% less for natural gas in 2012 marking the fourth consecutive annual average decline. Mortgage interest cost decreased 1.4% while homeowners' replacement cost advanced 2.4%.

Provinces: Prices increase in all provinces in 2012

The largest annual average gains were recorded in Newfoundland and Labrador, and Quebec (+2.1%) and the smallest in Alberta and British Columbia (+1.1%). As with gasoline, provinces in the East recorded larger price increases than provinces in the West for food purchased from stores.

The Bank of Canada's core index

On an annual basis, the Bank of Canada's core index increased 1.7% in 2012 following a 1.6% rise in 2011.