Consumer Price Index

Consumers paid 2.2% more in September for the goods and services included in the Consumer Price Index (CPI) basket than they did in September 2002. This follows a 12-month rise of 2.0% in August. September's 12-month increase remains well below the recent highs of early 2003, when energy prices, and especially gasoline prices, were providing the bulk of the upward pressure.

Excluding energy, the CPI rose 1.9% from September 2002 to September 2003, after rising 1.6% in August. Although energy prices remain a significant influence on the All-items CPI, their overall impact over the last four months has been less volatile than has typically been the case.

The 12-month percentage change in the CPI continues to be pressured by increases in automotive vehicle insurance premiums, as well as natural gas prices. Insurance premiums for automotive vehicles rose 22.2% from September 2002 to September 2003. Most of this increase occurred in the first half of the 12-month period. The natural gas index was 49.4% higher than in September 2002. This increase was the result of higher prices in Ontario and the effects of a payment to Northern Alberta customers following the sale of a gas field last year, which made the September 2003 index higher by comparison. September is the last month where the effect of this payment on the natural gas index for Alberta will be felt.

Students paid an average of 8.1% more in tuition fees this year, the largest advance since September 1997 and a significant acceleration from increases over the previous three years, which averaged 3.8%. The tuition fee index for a given province takes into account the fact that some of that province's residents attend educational institutions in other provinces. Increases in tuition fees varied from 0.5% for Quebec residents, where tuition fees are frozen for a seventh consecutive year, to 26.2% for British Columbia's. Only the tuition fees for Newfoundland and Labrador residents (-1.6%) fell.

Gasoline prices, homeowners' replacement cost and the price of cigarettes also added to the upward pressure on the All-items CPI.

Lower prices for electricity, automotive vehicles and traveller accommodation had the strongest moderating effect on the increase in the All-items CPI.

Slight increase in the CPI between August and September

The CPI continued its slow moving upward trend, going up 0.2% from August to September. This rise follows a monthly advance of 0.2% in August and consecutive increases of 0.1% in each of the three preceding months. Higher tuition fees, as well as higher prices for women's clothing, natural gas and men's clothing exerted upward pressure on the All-items CPI. Downward pressure came from lower prices for fresh vegetables, traveller accommodation, air transportation and gasoline.

Students had to pay 8.1% more in tuition fees this year, the largest rise since September 1997. Increases were highest for British Columbia residents (+26.2%). The tuition fee index for a province takes into account the fact that some residents of that province are studying in institutions outside of the province. After a six-year freeze in British Columbia universities that ended in 2002, tuition fees for residents of this province have jumped 52.9%. In 2003, only the tuition fees for Newfoundland and Labrador residents fell (-1.6%). As the share of government funding in university operating budgets declined, the 1990s saw hikes in tuition fees averaging 10.3% with a high of 16.9% in September 1991. Between September 2000 and September 2003, the rate of increase of tuition fees has slowed to an annual average of 4.9%. The current index level is 175.8% higher than in September 1990.

Overall, the clothing index rose 4.2%, bringing the index close to March 2003 levels. This is a stronger increase than what is typical for this time of the year but follows unusually strong decreases in the spring. Increases were widespread across products and provinces. The largest part of the upward pressure came from women's clothing (+5.7%), followed by men's (+2.7%) and children's (+3.1%) clothing.

The natural gas index rose 3.8% in September, following price increases in Alberta. Higher prices were caused by natural gas companies underestimating August's consumption and price increases on the North American commodity market.

In September, fresh vegetable prices fell 10.8%. Decreases were attributed mainly to the ongoing supply of local products.

Traveller accommodation prices fell on average 4.5%, as several hotel and motel operators lowered their rates with the end of the peak tourist season. Price declines of this magnitude are therefore typical in September. The residents of every province, except Newfoundland and Labrador (+1.3%), experienced a drop in prices. The traveller accommodation index, like the one for tuition fees, takes into account the fact that some residents of a given province consume these services in other provinces.

Air transportation prices went down 3.5%. Decreases of this size are usual in September, as lower fares are available to travellers to transatlantic, Pacific/Asia and southern destinations.

Gasoline prices fell on average 0.7% from August to September, mainly as a result of decreases in Ontario and Quebec.

The seasonally adjusted CPI increased slightly from August to September

After adjusting for seasonal variations, the All-items CPI rose 0.2% from August to September. The factors contributing to this rise were increases in the indexes for clothing and footwear (+1.2%), recreation, education and reading (+0.6%), health and personal care (+0.4%), alcoholic beverages and tobacco products (+0.3%), shelter (+0.2%), food (+0.2%) and household operations and furnishings (+0.2%). These increases were partly offset by a drop in the seasonally adjusted index for transportation (-0.4%).

All-items excluding the eight most volatile components

The All-items index excluding the eight most volatile components as defined by the Bank of Canada rose 1.7% from September 2002 to September 2003. This marks the third consecutive month of 12-month increases below 2.0% (+1.8% in July and +1.5% in August). The main contributors to September's rise were higher automotive vehicle insurance premiums (+22.2%), tuition fees (+8.1%) and homeowners' replacement cost (+6.1%).

The All-items index excluding the eight most volatile components as defined by the Bank of Canada increased 0.3% from August to September. Most of the upward pressure came from higher tuition fees and women's and men's clothing prices. Downward pressure came from lower prices for traveller accommodation and automotive vehicle purchases.

Energy

The energy index rose 6.5% in September from September 2002, following a 12-month increase of 7.6% in August. Natural gas prices (+49.4%) continued to have the strongest upward effect on the energy index. Gasoline (+5.3%) and fuel oil (+2.1%) prices also contributed to the advance, whereas electricity prices fell (-8.3%), mainly because of the change in Ontario from an open market to a regulated one in December 2002.

The energy index fell 0.1% from August to September. Price decreases for gasoline, fuel oil and electricity were almost entirely offset by an increase in the price of natural gas.

Available on CANSIM: tables 326-0001, 326-0002, 326-0009, 326-0012 and 326-0016 to 326-0018.

Definitions, data sources and methods: survey number 2301.

Available at 7 a.m. on Statistics Canada's website. From the home page, choose Today's news releases from The Daily, then Latest Consumer Price Index.

The September 2003 issue of the Consumer Price Index (62-001-XIB, $9/$83; 62-001-XPB, $11/$103) is now available.

The October 2003 Consumer Price Index will be released on November 19.

For more information, to enquire about the concepts, methods or data quality of this release, or to obtain a fact sheet on the changes to the treatment of rebates in the CPI, call Rebecca McDougall (1-866-230-2248; 613-951-9606; fax: 613-951-1539; infounit@statcan.gc.ca) or Ron Morency (613-951-3103), Prices Division.