1. Date: September 21, 2010
Canadian Consumer Price Index (CPI)
Canadian Consumer Price Index, August 2010 Results Year-Over-Year Per Cent Change
4%
Source: Statistics Canada
3%
Link to Release:
http://www.statcan.gc.ca/daily-quotidien/100921/dq100921a-eng.htm 2%
1%
Summary: Canada’s Consumer Price Index (CPI) – the most commonly
quoted measure of price inflation – increased by 1.7 per cent year-over-year in 0%
CPI Annual Per Cent Change
August after a 1.8 per cent annual increase in July. The August result was -1%
Core CPI (Bank of Canada) Annual Per Cent Change
driven largely by a five per cent rise in energy prices, but prices were higher for -2%
seven of the eight major index components. The Bank of Canada’s Core CPI,
which strips out the most volatile components in the index, climbed 1.6 per
cent in August. The annual rate of inflation was highest in Ontario, where a 2.9 Source: Statistics Canada
per cent increase in prices was experienced. The annual CPI increase in
Canadian Gasoline Price (CPI Component)
Ontario was driven by higher prices for gas, electricity, passenger vehicle
Year-Over-Year Per Cent Change
insurance premiums and estimated homeowner's replacement costs.
40%
30%
Analysis: Annual growth in both the “All Items” and “Core” Consumer Price
20%
Indices were below the Bank of Canada’s projection for the third quarter. With
10%
this in mind, the latest CPI release adds fuel to the interest rate debate in 0%
Canada. The calls for the Bank of Canada to halt interest rate hikes until we -10%
have a better idea of the economic growth trajectory in Canada will likely -20%
become louder. The argument will be that with inflation below the two per cent -30%
target we are not experiencing strong upward pressure on consumer prices, so
-40%
there is no need to hike rates in order to slow spending. However, in recent
statements the Bank has argued that consumer and business spending is in
Source: Statistics Canada
line with expectations. This suggests that the Bank may still be considering
Written By:
further rate hikes this year and/or in 2011.
Jason Mercer
TREB Senior Manager of Market Analysis.
jmercer@trebnet.com