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Page added on February 22, 2014
Canada Inflation Accelerates on Heating Costs
Canada’s inflation rate accelerated the most in 20 months on a surge in home heating costs amid one of the most severe winters in decades.
The consumer price index rose 1.5 percent in January from a year earlier, the most since June 2012, following December’s 1.2 percent pace, Statistics Canada said today from Ottawa. The nation’s statistics agency also said retail sales in December dropped 1.8 percent, the most in a year. Economists forecast inflation rising at a 1.3 percent pace and a 0.4 percent drop in sales, according to median forecasts in separate Bloomberg News surveys.
Bank of Canada Governor Stephen Poloz has warned persistently slow inflation poses one of the biggest risks to the Canadian economy, partly because it reflects slack in production. This month’s reading suggests investors will scale back bets that Poloz will reduce interest rates later this year, even with the decline in store sales.
“CPI trumps retail sales,” said Camilla Sutton, chief foreign-exchange strategist at the Bank of Nova Scotia in Toronto. The stronger-than expected inflation report “feeds directly into Bank of Canada expectations,” she said, adding “it will remove any pricing for an interest rate cut in Canada and is Canadian dollar positive.”
Canada’s currency pared earlier declines after the report, trading down 0.4 percent higher at C$1.1143 per U.S. dollar at 8:53 a.m. in Toronto. It weakened as much as 0.9 percent to C$1.1194 earlier.
2% Target
Poloz last month kept the central bank’s key lending rate at 1 percent and said the risks of inflation holding below its 2 percent target have increased, which helped push the Canadian dollar to four-year lows.
Inflation averaged 0.9 percent last year, decelerating from 1.5 percent in 2012 to the slowest pace since 2009 when Canada’s economy was emerging from a recession.
The annual core rate, which excludes eight volatile products, accelerated to 1.4 percent from a 1.3 percent gain a month earlier. Economists surveyed by Bloomberg News forecast today’s reading of core inflation at 1.3 percent, according to the median forecast.
The central bank expects inflation will return to its 2 percent target in about two years, as a recovering economy and a weaker dollar help absorb excess capacity.
Natural Gas
On a monthly basis, prices rose 0.3 percent in January while core prices increased 0.2 percent. Economists forecast a 0.1 percent rise for both measures.
Statistics Canada also said today its seasonally adjusted inflation measure rose 0.2 percent in January from December, while the adjusted core rate rose by the same amount.
The cost of natural gas jumped 3.2 percent during the month, while home heating fuel oil was up 4.1 percent. Electricity gained 1.2 percent.
All energy costs jumped 0.8 percent during the month, the statistics agency said.
Among the eight major components of the consumer price index tracked by the agency, shelter and food costs were the biggest contributors to the increase in January inflation. Shelter costs increased 0.5 percent from December and were up 2.1 percent from a year ago. Food costs were up 0.4 percent during the month and are up 1.1 percent from a year ago.
13 Comments on "Canada Inflation Accelerates on Heating Costs"
Kenz300 on Sat, 22nd Feb 2014 3:54 pm
Once installed wind and solar power have no monthly fuel bills for over 20 years………….. How much will fossil fuels increase in price over the next 20 years?
ghung on Sat, 22nd Feb 2014 4:23 pm
But,, but, Canada is ‘swimming’ in oil, gas and hydro. Why should they have to pay more? It’s their stuff, right?
J-Gav on Sat, 22nd Feb 2014 4:37 pm
Brrr! Used to live in Michigan and I know those cold winters well. Here in Paris we’ve had an exceptionally warm winter, temps in the high 40s, low 50s, not one daytime freeze. Don’t want to speak too soon though, we might well yet get a little hello from Siberia …
Plantagenet on Sat, 22nd Feb 2014 5:38 pm
The Canadians are way behind the times. Here in the US we removed energy and food from our cost-of-living calculations long ago, a move that has proven very effective in making the US look like it has a low inflation rate for years now.
Does Canadian still count all its unemployed when it calculates unemployment? No no no…..they’ve got to learn to spin their data better like we do in the US!
paulo1 on Sat, 22nd Feb 2014 8:13 pm
@ Ghung
We do pay more for fuel but that is the price of having a large country with small population to cover infrastructure costs, and a single payer medical system with good health outcomes. Fuel cost yesterday in Campbell River, B.C was $1.239/litre, or $4.70 per us gallon. Today it was supposed to rise to $1.319/litre…or $4.99 per us gal. Electricity costs .07/Kwh for tier 1 with a sliding scale for excess use. Rates our slated to rise.
Our dollar is currently down big time against usd which may have affected the price as we pay a more global price for our fuel…but I don’t know why the big increase happened? It sure can’t be summer blend switchover ’cause it sure isn’t summer.
By the way, although many hate our Govt., both Provincial and Federal, this weeks Provincial budget was balanced and next year the Federal budget is on track to being balanced after 5 years of our version of bailouts. Realistic taxes do work. Personally, I would like to see fuel costs rise 25% more to curb stupid vehicle purchases. As mentioned before, we operate an 86 4X4 Toyota PU with a 2.4 litre engine and a 2009 Yaris with a 1.5L engine. We seldom drive the pickup…using it for building materials or firewood use.
We have no heat bill beyond gas for the chainsaw and the sweat to cut it…currently with 6 years supply stacked in the woodsheds. 6 inches of snow so far today with no let up in sight. It was supposed to rain but I don’t think it will. Glad to have wood heat and soup on a day like this.
By the way, great Hockey game yesterday between US and Canada. Great result, too. Today’s result was even better!!
Paulo
DC on Sat, 22nd Feb 2014 8:34 pm
Bloomberg morons. Extremely adept at proving they no clue about whats going on in there own nation-let alone others.The real driver of inflation in Canada, is largely food costs atm. Heating bill increases, are not really that significant. Canadians habitually waste heating energy even worse than amerikans simply by virtue of laziness and poor building standards. Put another way, they crank the heat up to 80 and then head out for the day to consume, drive around aimlessly whatever-then they expect to come back to a toasty warm sawdust shack.
This type of behavior(and its typical) did not start yesterday, or last year-but has been a feature of Canadian behavior for generations. You can see it the data-Canadians waste even more energy on things like space heating\cooling per capita than amerikans-and thats staying something. ‘We’ then turn around and blame of on the ‘climate’ and the ‘size’ of the country. We never-ever attribute it to our shoddy building practices-appalling urban design or the root cause-inherent laziness and a system that encourages casual waste in the pursuit of our comfort.
Put another way heating isnt driving inflation because wasting energy has been ingrained feature among Canadians for a long time now. Whatever ‘inflation’ its causing is minor at best.A of folks here(in the real world) constantly talk about how expensive food is getting-yet I have yet to hear one single person complain about high heating bills.
*If you have a shack like the one in the picture above-yea, you’ll pay more. Again consider how leaky and poorly built Canadian homes are and the ‘why’ wont be such a big mystery anymore. That house, is built to the same shoddy standards as one in say-florida would be. You could drop that house in the pic above in that state and no one would bat an eye. The only difference-would be *slightly* more insulation-and marginally thicker glass-and even thats not a given.
Makati1 on Sun, 23rd Feb 2014 2:25 am
Paulo
Canada, the 51st state of the US. You are so tied to the US that the difference is only where your taxes go, for now.
You are also currently in a world wide currency war started by … you guessed it! The US Federal (privately owned) Reserve!
Makati1 on Sun, 23rd Feb 2014 2:28 am
Paulo, maybe you should invest in a few very good axes, crosscut saws and the skill to keep them sharp? What will you do when you cannot get gas or parts for that chainsaw? ^_^
Canada, the 51st state of the US. You are so tied to the US that the difference is only where your taxes go … for now.
You are also in a world wide currency war started by … you guessed it! The US Federal (privately owned) Reserve!
Makati1 on Sun, 23rd Feb 2014 6:49 am
Sorry for the double. No way to correct mistakes or delete comments here.
GregT on Sun, 23rd Feb 2014 7:40 am
kenz,
“Once installed wind and solar power have no monthly fuel bills for over 20 years………….. How much will fossil fuels increase in price over the next 20 years?”
You are close to being correct, the system that I am planning to install, has a payback time of 26 years at current hydro electric power costs. Get your own system installed soon, and you too might also be OK for a couple more decades.
As for the billions of people without, make sure you completely cover your windows at night. Or move.
Davy, Hermann, MO on Sun, 23rd Feb 2014 11:16 am
My, BS Spam filter kicked out a bogus statement just now:
Canada, the 51st state of the US. You are so tied to the US that the difference is only where your taxes go, for now.
Your country is worse, China has taken you over from the inside out. The lion share of the real power in your country is the Rich Chinese. They have started the next conquest by taking the little islands just on your maritime border. They will move on rest when the time is right. You are lucky the US has your back. Let’s see how anti-American you are when you see Chinese soldiers in your streets. The US may not think you worth the trouble. Then we will see how it is for you in your neofeudal arrangement.
BTW, China and the US are friendly countries that co-exist in trade and cultural connections. The Northern US states have more in common in some cases with Canada then let’s say Texas. I know your problem you never had geography classes in school. You just got interest late in life hence the fanciful stories.
Davy, Hermann, MO on Sun, 23rd Feb 2014 11:17 am
BTW, China and the US – meant Canada & US
GregT on Sun, 23rd Feb 2014 9:57 pm
Reportedly, the US is Canada’s largest trading partner, but how realistic are the statistics? The vast majority of the US products sold in our stores, are actually manufactured in China by American corporations. Like GDP, the numbers are skewed. They do not reflect the reality of the situation.
All levels of Canadian government, municipal, provincial, and federal, have been on a decades long mission to directly increase trade with Asia. Bypass the middle man, so to speak. Tourism, natural resource development and export (especially in the energy sector), real estate development and investment, and even immigration. In Vancouver BC, white english speaking Canadians have been a visible minority for several years now, and there are even large parts of the city where the street signs are now only in Cantonese. There are more and more large shopping centres that I personally will not visit, simply because people either do not speak English, or do not wish to speak English.
It is estimated that 68% of all downtown condos are investment properties, and as many as 25% sit empty. The recent real estate boom in Vancouver is largely due to offshore Asian investment capital, and million dollar plus homes are regularly being bought sight unseen.
A quick drive by every single school in the Vancouver area, quickly exposes the percentage of young Canadians of white heritage. If I was to take a guess, I would think that the percentage of Asian school aged children, would be in the high 90th percentile.
There is far more Asian influence and Asian economic activity now in BC than American, and the numbers are growing exponentially. If it was possible for BAU to continue for several more decades, America’s neighbour to the northwest would be predominantly dominated by Asians, and their cultural and economic alliances would remain firmly in Asia.