Analysis

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The Consumer Price Index (CPI) rose 1.1% in the 12 months to August, following a 1.3% increase in July.

The increase in the CPI in August was led by shelter costs, which rose 1.1% on a year-over-year basis, following a 1.3% gain in July.

Compared with August last year, consumers paid more for rent and natural gas, while mortgage interest cost declined 3.6%.

12-month change in the major components

In addition to shelter, the transportation component was a main contributor to the year-over-year increase in the CPI in August. The indexes for food as well as clothing and footwear were the only components to increase more in August than in July. The health and personal care component declined year over year for the fifth consecutive month.

Transportation costs rose 1.3% in the 12 months to August, following a 2.7% advance in July. On a year-over-year basis, consumers paid 2.2% more for gasoline in August, after paying 6.1% more in July. In addition, prices for the purchase of passenger vehicles increased 0.6% in the 12 months to August, a smaller rise than in July (+2.0%).

Food prices increased 1.0% in August, compared with the same month last year. This followed a 0.8% rise in July. Consumers paid 0.7% more for food purchased from stores in the 12 months to August, led by higher prices for meat (+1.6%). The cost of fresh fruit advanced 4.4% on a year-over-year basis in August, after rising 1.5% in July.

Prices for food purchased from restaurants increased 1.5% year over year in August, matching the increase in the previous month.

The clothing and footwear index rose 2.3% in the 12 months to August, after increasing 1.5% in July. Compared with the same month last year, there were fewer discounts on clothing items observed in August.

The health and personal care index decreased 1.4% on a year-over-year basis in August. This followed a 0.4% decline in July. Compared with August last year, consumers paid 4.2% less for prescribed medicines. In addition, the cost of non-prescribed medicines declined on a year-over-year basis in August, after rising in July.

12-month change in the provinces

Consumer prices rose in nine provinces in the 12 months to August. Manitoba recorded the largest increase among the provinces for the third consecutive month. British Columbia was the only province to post a decline on a year-over-year basis.

In Manitoba, consumer prices advanced 2.7% in the 12 months to August, following a 3.0% increase in July. Manitoba continued to post larger price gains for passenger vehicle registration fees and for cigarettes compared to the national average. The year-over-year increases for these two indexes in Manitoba were impacted by month-over-month price gains that occurred in previous months, rather than by changes that occurred in August.

Prices in British Columbia decreased 0.1% in the 12 months to August, after posting no change in July. British Columbia was the only province which recorded year-over-year price declines for food purchased from restaurants and homeowners’ replacement cost. The decrease for food purchased from restaurants in British Columbia in August was due more to a monthly decline observed in April 2013 than to recent price changes.

Seasonally adjusted monthly CPI increases

On a seasonally adjusted monthly basis, the CPI rose 0.1% in August, matching the increase in July.

On a seasonally adjusted basis, four of the eight major components posted increases in August. The largest increases were in the food index (+0.4%), and the recreation, education and reading component (+0.3%).

The clothing and footwear index increased 0.2% on a seasonally adjusted basis in August. However, before seasonal adjustment, the index rose 1.3%, indicating that the observed increase was largely seasonal. In addition, the seasonally adjusted index for transportation edged up 0.1% in August, while, before adjustment, the component declined 0.5%.

The seasonally adjusted indexes for household operations, furnishings and equipment (-0.2%) and for alcoholic beverages and tobacco products (-0.1%) were the only components to post declines.

Non-seasonally adjusted monthly CPI records no change

On a monthly basis and before seasonal adjustment, the CPI posted no change in August, after increasing 0.1% in July.

Higher prices were recorded for clothing and traveller accommodation in August.

Compared with July, rent went up 0.3% in August. Rent increased in all provinces with the largest gain in Quebec (+0.5%).

Gasoline prices fell 1.0% in August, after advancing 1.3% in July. Prices for gasoline declined in six provinces in August. The exceptions were the Atlantic Provinces where gasoline prices rose on a monthly basis.

Consumers also paid less for fresh vegetables, telephone services and the purchase of passenger vehicles in August.

On a provincial basis, consumer prices rose in five provinces in August, with the largest increase occurring in Prince Edward Island (+0.4%). There was no change in the CPI for Ontario, while the largest decreases (-0.2%) were recorded for Saskatchewan and Alberta.

Bank of Canada’s core index

The Bank of Canada’s core index rose 1.3% in the 12 months to August, following a 1.4% increase in July.

On a month-to-month basis and before seasonal adjustment, the core index edged up 0.2% in August, after recording no change in July.

On a monthly basis, the seasonally adjusted core index posted no change in August, after rising 0.1% in the previous month.