Canada July Consumer Price Index Report (Text)

The following is the text of Canada’s consumer price index report for July released by Statistics Canada.

Consumer prices rose 1.3% in the 12 months to July, following a 1.5% gain in June. Higher prices for the purchase of passenger vehicles, food purchased from restaurants, meat and electricity were major factors in the increase of the July Consumer Price Index (CPI).

12-month change in the major components

Consumer prices rose for every major component in the 12 months to July, with the exception of clothing and footwear.

Food prices rose 2.1% in the 12 months to July following a 2.0% advance in June. These two increases were the lowest year- over-year gains in food prices since the beginning of 2011. Leading the July increase were higher prices for food from restaurants (+2.4%), meat (+5.3%) and cereal products (+3.7%). In contrast, prices for fresh vegetables declined for the fifth consecutive month.

Shelter costs rose 1.0% in the 12 months to July after increasing 1.3% the previous month. Increases for electricity prices, homeowner’s replacement cost, and rent were major factors leading to the July rise in shelter costs. Natural gas prices continued to fall on a year-over-year basis.

Higher costs for telephone services and financial services led to year-over-year price gains for the household operations, furnishings and equipment component.

Prices for transportation rose 1.1% on a year-over-year basis in July after increasing 1.7% in June. The cost for the purchase of passenger vehicles increased 2.3% in July, following a 3.9% rise the previous month.

The only major component which declined in the 12 months to July was clothing and footwear (-0.7%), led by price declines for women’s clothing.

Energy prices

Energy prices fell 1.2% in the 12 months to July after declining 0.8% in June.

Natural gas prices dropped 15.2% on a year-over-year basis, continuing a pattern of declines observed since January 2011. Notable declines were recorded in Ontario and Alberta.

Gasoline prices fell 1.3% in the 12 months to July, the third consecutive year-over-year decline. Prices for gasoline decreased in the Atlantic provinces, Ontario and Quebec, while they rose in the Western provinces.

The cost of electricity increased 3.7% year over year in July, after a 5.9% rise the month before. Increases in electricity prices in Ontario were the biggest factor in this rise.

12-month change in the provinces

Consumer prices rose at a slower rate in eight provinces on a year-over-year basis in July compared with June. Prices in Ontario grew at the slowest pace of any province, while the Quebec CPI recorded the largest increase.

The Ontario CPI rose 0.7% year over year in July, the smallest increase in the province since October 2009. As in June, Ontario recorded the smallest rate of increase for food purchased from stores, which rose 0.8% in July. This compares with a 1.9% increase for Canada. Gasoline prices declined 3.7% in the 12 months to July.

Consumer prices in Quebec increased 1.9% in the 12 months to July after rising 2.0% in June. Prices for food purchased from restaurants, which accounts for a significant proportion of consumer spending in the province, rose 3.6% in July. Prices for the purchase of passenger vehicles and meat also increased.

In Manitoba, consumer prices rose 1.8% in July after increasing 1.4% in June. This faster increase was mainly the result of larger price gains for gasoline, which rose 5.2% in July, following a 0.7% increase in June.

Seasonally adjusted monthly Consumer Price Index decreases

On a seasonally adjusted monthly basis, the CPI declined 0.1% in July, after decreasing 0.2% in June. This marked the third consecutive monthly decline in the seasonally adjusted CPI.

The seasonally adjusted index for transportation fell 0.6% in July, following a 1.1% decline in June. The clothing and footwear index declined 0.9% after falling 0.1% the previous month. In contrast, prices for food increased 0.4% on a seasonally adjusted monthly basis in July.

Bank of Canada’s core index

The Bank of Canada’s core index (http://www.statcan.gc.ca/pub/62-001-x/2012007/technote- notetech2-eng.htm) rose 1.7% in the 12 months to July, following a 2.0% gain in June.

On a monthly basis, the seasonally adjusted core index was unchanged in July for the second consecutive month.

Note to readers

The special aggregate “Energy” includes: electricity; natural gas; fuel oil and other fuels; gasoline; and fuel, parts and supplies for recreational vehicles.

The Bank of Canada’s core index excludes eight of the Consumer Price Index’s most volatile components (fruit, fruit preparations and nuts; vegetables and vegetable preparations; mortgage interest cost; natural gas; fuel oil and other fuels; gasoline; inter-city transportation; and tobacco products and smokers’ supplies) as well as the effects of changes in indirect taxes on the remaining components.

A seasonally adjusted series is one from which seasonal movements have been eliminated. Users employing Consumer Price Index data for indexation purposes are advised to use the unadjusted indexes. For more information on seasonal adjustment, see Seasonal adjustment and identifying economic trends (http://www.statcan.gc.ca/pub/11-010-x/2010003/part-partie3- eng.htm) .

To contact the reporter on this story: Ilan Kolet in Ottawa at ikolet@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net

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