Statistics Canada: Food, Gas, Shelter Costs Rise

Increasing costs for mortgage interest, natural gas and fuel oil and other fuels continued to propel costs for shelter. Nearly all food items registered price increases.

Statistics Canada reports of the eight major components of the CPI, shelter costs remained the primary contributor to the 12-month increase in consumer prices in September. Transportation costs were replaced by food costs as the second leading contributor. Transportation costs, now third, continued to be buoyed by higher gasoline prices, although lower prices for vehicles have had a moderating effect. Increasing costs for mortgage interest, natural gas and fuel oil and other fuels continued to propel costs for shelter. Most food items registered price increases with bread and cereal products, fresh fruit and vegetables and dairy products contributing significantly to higher food prices in September. The seasonally-adjusted monthly CPI rose 0.2% from August to September, up from the 0.1% increase posted in the previous period. Gasoline was a large upward contributor to the 12-month change in the CPI as prices at the pump rose 26.5% in September and varied considerably during the month. Mid-September, gasoline prices rose by over 10 cents a litre in many regions of the country as Hurricane Ike loomed over the Gulf Coast and caused a significant reduction in crude oil production. Consumers, however, received some relief as pump prices retreated towards the end of the month. Helping to mitigate the increase in costs for transportation was a 9.3% decline in prices to purchase and lease passenger vehicles. This was the largest drop since February 1956. Overall, transportation costs rose 4.7%, a slowdown from the 5.8% rate of growth posted in August. Prices for food, out of the eight major components, posted the strongest growth and replaced transportation costs as the second major contributor behind shelter to the 12-month change in the CPI in September. Prices for food have been gaining momentum since the beginning of 2008. In the first nine months of 2008, prices for food were up 2.4% compared with the same period in 2007. Overall, food prices in the 12 months to September rose 5.6%, an increase from the 4.5% rise recorded in August. Rising prices for bakery and cereal products (+15.5%) continued to exert the strongest upward pressure on prices for food. Also contributing to rising food costs were price increases for fresh fruit, vegetables and milk. Shelter costs (+4.5%) continued to rise in September as a result of increases in mortgage interest cost and prices for certain fuel (natural gas and fuel oil and other fuels). A 1.9% decline in electricity prices helped to offset increasing prices for other utility items. The drop in electricity prices was the largest since November 2003.