Friday, October 22, 2010

Energy costs drive inflation rate to 1.9%

OTTAWA — Canada's inflation rate rose in September, driven largely by higher energy costs.

Annual inflation was running at 1.9 per cent last month, according to Statistics Canada's consumer-price index released Friday.

That followed a gain of 1.7 per cent in August, and was in line with economist expectations for September.

Much of the gain came from energy prices, which were 5.6 per cent higher than a year earlier. This included gasoline costs, which were up 3.1 per cent, and electricity, which was 7.7 per cent more expensive.

Overall inflation, on a year-to-year basis, has been on the rise in recent months after going as low as one per cent in June. The Bank of Canada's target inflation rate is two per cent cent. Higher energy prices in comparison to a year earlier have been a major component of inflation for a few months now, with this element seeing a five per cent rise in August.

Core inflation, which strips out volatile items such as energy and certain foods — and even the new harmonized sales taxes in British Columbia and Ontario — was 1.5 per cent last month. Economists expected the core rate to be 1.6 per cent, which it was in August. This measure, which is closely monitored by the central bank for underlying trends, has fallen from as much as 2.1 per cent in February.

Robert Kavcic, economist with BMO Capital Markets, said the "soft" core rate "highlights the fact that plenty of slack remains in the Canadian economy."

He added: "Inflation remains tame in Canada, which will allow the Bank of Canada to stay on hold (on interest rates) well into 2011."

The only major product category to see lower prices in September was clothing and footwear, prices for which were 2.2 per cent less than a year earlier.

Looking at the other main components: food prices were up 2.1 per cent; shelter costs were up 2.5 per cent; household operations, furniture and equipment up 1.4 per cent; transportation costs up 3.1 per cent; health and personal-care items up 2.1 per cent; recreation, education and reading up 0.7 per cent; and alcohol beverages and tobacco products were 2.4 per cent more expensive.

Provincially, Ontario had the highest inflation rate in September at 2.9 per cent. Newfoundland and Labrador was also above average at 2.3 per cent.

The lowest inflation rate was in Manitoba at 0.5 per cent, following by Prince Edward Island at 0.8 per cent and Alberta at 0.9 per cent

On a month-to-month basis, consumer prices rose 0.3 per cent in September on a seasonally adjusted basis, compared to a 0.1 per cent gain in August.

Annual inflation by province in September

Newfoundland and Labrador 2.3%
Prince Edward Island 0.8%
Nova Scotia 1.8%
New Brunswick 1.6%
Quebec 1.0%
Ontario 2.9%
Manitoba 0.5%
Saskatchewan 1.2%
Alberta 0.9%
British Columbia 1.6%


  1. The electricity component in Ontario went up 17.3% over the last 12 months.

    See the detailed report here.

  2. Who's surprised? Mr.McG is so out of touch with taxpayers, "doesn't answer e-mails" according to his website,I guess not,he wouldn't have time. Between scheming to push through his tax increases, that aren't tax increases,hmm,and how to convince us that he knows better how to raise our children, it's a wonder he has time to spend with his own family for a 20 course meal in a well lit dining room, while the rest of us rummage for food in our bare cupboards in a barely lit home. The goodies will be coming out of the closet at election time, and we're all dumb as doornails if we fall for that.


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