Consumer prices rose 2.6% in the 12 months to October 2008

Consumer prices rose 2.6% in the 12 months to October 2008, a sharply slower pace than the 3.4% increase recorded in September. While October's slowdown was due primarily to slower price increases for gasoline, prices for food exerted stronger upward pressure on consumer prices. On a seasonally adjusted monthly basis, consumer prices fell 0.5% from September to October.

Although the growth in gasoline prices eased in the 12 months to October, they were still the most significant upward contributor to the overall growth in the Consumer Price Index (CPI). Prices at the pump increased 13.3%, compared with a 12-month change of 26.5% in September. On a monthly basis, gasoline prices fell 13.4% from September to October 2008.

Excluding gasoline, the CPI rose 2.0% in the 12 months to October. Excluding all energy components, the CPI advanced 1.8%.

Increasing mortgage interest costs were the second major contributor to October's rise. Other energy products, such as natural gas and fuel oil and other fuels, also continued to push up consumer prices, as did price increases for various food items, namely bakery and cereal products.

Helping to mitigate the rise in the CPI in October were continuing price declines for purchasing and leasing passenger vehicles, women's clothing and computer equipment and supplies.

12-month change: Food costs match shelter costs as major contributor to the growth in the CPI

Of the eight major components in the CPI, seven recorded increases in the 12 months to October. The largest upward contributors were costs for shelter and food, followed by transportation and household operations, furnishings and equipment.

The clothing and footwear price index remained the only major component that declined.

Shelter costs rose 3.8% in October, slower than the 4.5% rise posted in September. Price increases for mortgage interest costs (+7.2%), natural gas (+11.1%) and fuel oil and other fuels (+30.1%) were the largest upward contributors to the increase in the shelter component. However, the increase for all three of these items was slower than it was in September, thereby mitigating the rise in shelter costs for October.

Increasing property taxes also contributed to rising shelter costs in October. Property taxes rose by an average of 3.2% across Canada, ranging from a high of 6.1% in Alberta to a low of 0.3% in Newfoundland and Labrador and Manitoba.

Food prices continued to gain momentum, increasing 6.1% in October, after a 5.6% rise in September. This was the eighth consecutive month in which food prices accelerated.

A 7.3% rise in prices for food purchased from stores primarily accounted for this increase. Price increases for grain related products, mainly bakery (+14.2%) and cereal (+19.2%), continued to be the primary driver of rising costs for food purchased from stores. Other main contributors were price increases for dairy products (+5.4%) and fresh fruit (+13.7%) and fresh vegetables (+12.3%).

Owing to slower price increases for gasoline, transportation costs advanced 1.6% in October, a slowdown from the 4.7% rise recorded in September. Prices at the pump rose 13.3% in October on a year-over-year basis, compared with the 26.5% increase in September. Despite this slowdown, gasoline continued to be the primary upward contributor for transportation costs.

Increasing prices for passenger vehicle insurance and air transportation also contributed to the rise in transportation costs in October.

A 9.0% decline in prices to purchase and lease passenger vehicles was the most significant downward contributor for transportation costs. The latest decline comes on the heels of the 9.3% drop in September, the largest decline since February 1956.

Clothing and footwear prices fell in October for the 10th consecutive month. Although both clothing and footwear prices fell, it was a 5.8% drop in prices for women's clothing that primarily contributed to the 2.8% decline in the clothing and footwear price index.

The provinces: Growth in consumer prices slows in eight provinces

The growth in consumer prices slowed across most provinces in the 12 months to October. Only Manitoba and Saskatchewan did not report a slowdown.

Consumers in Prince Edward Island saw the greatest slowdown in consumer prices, from 5.5% in September to 3.9% in October.

The slowdown in the 12-month price change for gasoline between September and October largely contributed to easing consumer prices in all provinces. Quebec and Ontario posted the largest slowdowns in gasoline prices.

Although gasoline prices eased across the country, they remained the primary upward contributor of consumer prices for most provinces.

Price declines for purchasing and leasing passenger vehicles remained the largest downward contributor to the change in consumer prices in all provinces.

The 12-month change in the Bank of Canada's core index holds steady

The Bank of Canada's core index advanced 1.7% over the 12 months to October, identical to the rate posted in the previous two periods.

The seasonally adjusted monthly core index posted no growth from September to October, after increasing 0.2% from August to September.

For a more detailed analysis, consult the publication The Consumer Price Index.

Available on CANSIM: tables 326-0009, 326-0012, 326-0015 and 326-0020 to 326-0022.

Definitions, data sources and methods: survey number 2301.

More information about the concepts and use of the CPI are also available online in Your Guide to the Consumer Price Index (62-557-XIB, free) from the Publications module of our website.

The October 2008 issue of The Consumer Price Index, Vol. 87, no. 10 (62-001-XWE, free) is now available from the Publications module of our website. A paper copy is also available (62-001-XPE, $12/$111). A more detailed analysis of the CPI is available in this publication.

The November Consumer Price Index will be released on December 19.

For more information or to enquire about the concepts, methods or data quality of this release, contact Client Services (toll-free 1-866-230-2248; 613-951-9606; fax: 613-951-1539; prices-prix@statcan.gc.ca), Prices Division.