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Friday, January 22, 2016 - Overall inflation still low, but food inflation is taking off

Todd Hirsch • Chief Economist

January 22, 2016

Overall inflation still low, but food inflation is taking off

The annual rate of price increases for consumers in Alberta actually dropped a bit in December. According to the latest data from Statistics Canada, the all-items consumer price index rose 1.5 per cent in December from a year ago, down from two per cent in November.
 
But breaking down the inflation rate into various sub-categories of consumer items, one notices a big difference in price increases depending on what you buy. Fresh vegetables shot up in price by 14.4 per cent, and fresh fruit by 12.4 per cent. Both of these are a direct result of the lower Canadian dollar, since most produce from grocery stores is imported from the U.S. (or priced in U.S. dollars).
 
Other notable price increases were home owners’ insurance (+15.4 per cent), internet access service (+10.6 per cent) and cigarettes (+15.9 per cent).
 
Consumers got a big break, however, on other items. Gasoline continued to tumble, down seven per cent. Household utilities dropped too, with lower prices on both natural gas (-14.5 per cent) and electricity (-10.5 per cent).
 
Nationally, Canada’s inflation rate (+1.6 per cent) was more or less in line with Alberta’s. The Bank of Canada’s core index (which strips out items with volatile price movements, such as fresh produce and gasoline), rose 1.9 per cent—close to the target rate of two per cent. That should come as good news to the Bank of Canada, which decided this week to keep its trend-setting interest rate unchanged at 0.5 per cent.

posted in General at Fri, 22 Jan 2016 10:11:57 -0700



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