Inflation showing signs of life

Many economists see a small amount of inflation as good. If you agree, then October was a good month with the first 12-month increase in the CPI since May 2008.

After declining in 0.9 per cent in September, consumer prices rose 0.1 per cent in October compared with October 2008. This was the first 12-month increase since May 2009. The rise in the all-items Consumer Price Index (CPI) was mostly due to increasing gasoline prices. Although, gas prices in October were still 13.1% below the level in the same period last year, this compared with a 23.0% drop between this September and last September. In October, six major components in the CPI recorded significant price increases. Food prices were up 2.3 per cent during the 12-month period to October. This came on the heels of a 2.8% rise in September. On the bright side, October's increase was the smallest since May 2008. Prices for fish, seafood and other marine products rose a whopping 7.9 per cent making the rise in meat prices, 2.1 per cent, look small in comparison. Dining out became more expensive, increasing 2.7 per cent, but eating healthy cost less as prices fell for fresh fruit and fresh vegetables. Getting an education became more expensive with tuition fees up 4.1 per cent and reading material and other printed material increasing 6.8 percent. In contrast, prices for computer equipment and supplies and other electronic equipment items such as video, audio, and photographic equipment continued to fall. The decreased cost of transportation supplied the most significant downward pressure, falling 3.1 per cent in the 12 months to October. Lucky car buyers paid 4.1 per cent less for their vehicles and this follows a 5.9 per cent decrease in September. Putting gas in the new car cost less but putting insurance on the family wheels was up 7.7 per cent. Shelter presented a mixed bag of expenses. In the end these costs fell 1.6 per between October 2008 and October 2009. The 30.3 per cent decline in natural gas prices and in the 29.4 per cent drop in the cost of fuel oil and other fuels played a big role in keeping shelter costs low. But the cost of maintaining that home rose 7.2 per cent while property taxes climbed 4.3 per cent. On a seasonally adjusted monthly basis, the CPI rose 0.4% from September to October, after rising 0.1% from August to September. Economists and market analysts watch the consumer price figures to discern potential changes in interest rates. The central Bank of Canada continues to assure the market its key interest rate will remain at a record low of .25 per cent through June 2010. Of course, if inflation shows evidence of returning, this all could change. Quebec and New Brunswick led the country with the 0.5 per cent price increases while British Columbia consumers enjoyed a 0.6 per cent drop in prices - the fifth consecutive monthly decline. The seasonally adjusted monthly CPI has gone up in five of the past six months. For more information, visit Statistics Canada on the Internet.