canadian consumer price index august2009
TRANSCRIPT
Date: September 17, 2009
Canadian Consumer Price Index, August 2009 Results
Source: Statistics Canada
Link to Release:
http://www.statcan.gc.ca/daily-quotidien/090917/dq090917a-eng.htm
Summary: The Consumer Price Index (CPI) is used to measure the rate at
which prices for consumer goods and services are rising on an annual basis. In
August, the Consumer Price Index (CPI) “All Items” measure fell 0.8 per cent
year-over-year nationwide, and 1.2 per cent in the province of Ontario. The
dominant factor in this decline was a 19.1 per cent drop in Energy Prices,
including a 21.2 per cent drop in gasoline prices. With these factors removed,
the less volatile Bank of Canada Core CPI increased by 1.6 per cent.
Analysis: Given that the August result was in line with expectations at the Bank
Of Canada. The Bank has projected that declines in the “All Items” CPI will
trough in the third quarter of 2009 before increasing slowly toward the Bank’s
two per cent target in mid-2011. With CPI inflation projected to be below the
Bank’s target growth rate over the next year, the Bank will keep the overnight
lending rate at its record low until mid-2010. The expectation is that the Bank
will start to raise interest rates in the second half of 2010 to ensure that inflation
does not overshoot the two per cent target. It will also be important to watch the
value of the Canadian dollar vis-à-vis the US dollar. The risk is that a high
Canadian dollar could act as a drag on exports, slow economic recovery and
keep inflation below the Bank’s target. This could alter the Bank of Canada’s
plans regarding future interest rate adjustments.
-2%
-1%
0%
1%
2%
3%
4%
Source: Statistics Canada
Canadian Consumer Price Index (CPI)Year-Over-Year Per Cent Change
CPI Annual Per Cent Change
Core CPI (Bank of Canada) Annual Per Cent Change
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Source: Statistics Canada
Canadian Gasoline Price (CPI Component)Year-Over-Year Per Cent Change
Written By:
Jason Mercer
TREB Senior Manager of Market Analysis.