Loonie firms up after inflation comes in better than expected; M/M: -0.1% v -0.4% eyed

The Consumer Price Index (CPI) rose 2.0% on a year-over-year basis in December, following a 1.7% increase in November. Lower energy prices were offset by higher prices for various services, including air transportation, telephone services and travel tours. Excluding gasoline, the CPI rose 2.5% in December.

Chart 1 
The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline

Component highlights

All eight major components rose year over year in December, with the shelter index (+2.2%) contributing most to the increase.

Chart 2 
Consumer prices increase in all major components

Consumer prices for services rose 3.5% on a year-over-year basis in December, following a 2.7% increase in November. A month-over-month increase in the air transportation index (+21.7%) reflected higher prices for travel during the holiday season. Consumers paid 6.1% more for telephone services compared with December 2017, when a series of industry-wide price promotions temporarily offered significantly lower prices. The travel tours index rose 6.6% year over year, following a 0.5% increase in November. Prices for passenger vehicle insurance premiums (+5.1%) continued to rise in December, extending a series of rate increases.

The price of energy products (-3.7%) continued to decline year over year in December. As crude oil prices continued to fall amid a global supply glut, consumers paid 8.6% less for gasoline in December compared with December 2017. Natural gas prices declined 4.1% year over year.

Regional highlights

Prices rose more on a year-over-year basis in seven provinces in December compared with the previous month. Prices for fuel oil and other fuels increased less on a year-over-year basis in December (+5.6%) than in November (+17.0%), reflecting lower crude oil prices. This deceleration in the fuel oil and other fuels index moderated growth in the all-items CPIin Atlantic Canada, where fuel oil is more commonly used for home heating.

Among the provinces, British Columbia (+3.0%) posted the largest year-over-year increase in the CPI in December. On a year-over-year basis, consumers in British Columbia paid more for gasoline in December (+1.7%) than in November (+0.8%) amid a supply disruption following a temporary pipeline closure. In all other provinces, gasoline prices declined year over year.

Consumer prices in Quebec rose 1.1% on a year-over-year basis, after a 0.9% increase in November. Among the provinces, prices for fresh vegetables (+20.7%) rose the most in Quebec.

Seasonally adjusted monthly Consumer Price Index

On a seasonally adjusted monthly basis, the CPI rose 0.2% in December, following a 0.1% decline in November. The food index (+0.6%) and the health and personal care index (+0.6%) posted the largest increases, while the transportation index (-0.1%) declined.

Statistics Canada

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