Consumer prices fell 0.9% in July 2009

Consumer prices fell 0.9% in July 2009 compared with July 2008, following a 0.3% decrease in June. The decrease was due primarily to a 12-month decline of 23.4% in prices for energy products, particularly gasoline.

The all-items Consumer Price Index (CPI) excluding energy rose 1.8% in the 12 months to July.

Nationally, gasoline prices fell 28.3% between July 2008 and July 2009, following a 12-month decline of 24.3% in June.

Regular unleaded gasoline prices at self-service stations averaged 97.4 cents per litre in July 2009 compared with a record high of 136.6 cents per litre in July 2008.

Of the eight major components in the CPI, three recorded declines in the 12 months to July: transportation; shelter; and clothing and footwear. The most significant downward contributor was transportation, which includes lower prices for both gasoline and purchasing passenger vehicles.

In the shelter component, prices fell for natural gas, fuel oil and other fuels and homeowner's replacement costs, continuing a downward trend.

The primary upward pressure on consumer prices came from food, which increased 5.0% between July 2008 and July 2009.

Seasonally adjusted monthly CPI declines

On a seasonally adjusted monthly basis, the CPI fell 0.3% from June to July, after increasing 0.3% from May to June. July's decline was due primarily to a 1.6% drop in the transportation cost index. A monthly decrease in prices for gasoline in July compared with June largely accounted for the decline.

12-month change: Continuing declines in shelter and transportation costs

Prices in the transportation component declined 9.1% in the 12 months to July, following a 7.7% decrease in June. The primary contributors were the year-over-year drop in prices for gasoline and a decrease in prices for passenger vehicles and air transportation.

The cost of purchasing passenger vehicles fell 4.3% in July, a slowdown from both the 5.2% drop in June and the 6.6% decline in May. A 5.1% increase in passenger vehicle insurance premiums tempered the overall descent in the transportation component.

In the shelter component, prices decreased 2.0% in the 12 months to July following a 0.8% drop in June. This was primarily the result of price decreases for some utilities, notably natural gas, and fuel oil and other fuels. Shelter costs were also dampened by declines in homeowner's replacement costs and in mortgage interest costs.

The mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, fell 0.1% in July, following a 0.9% increase in June.

In the clothing and footwear component, prices for clothing fell 2.1%. The primary contributors were a 7.0% drop in prices for women's clothing and a 2.0% drop in men's clothing.

Food costs continued to put significant upward pressure on prices, albeit to a lesser degree than in previous months. In the 12 months to July, food prices rose 5.0%, compared with increases of 5.5% in June and 6.4% in May. Growth in food prices has been slowing since reaching a peak of 7.9% in March 2009, due to the slowdown of price increases for fresh fruit and vegetables and meat.

The main factor was higher prices for food purchased from stores, which rose 5.6% in July. This was slower than the 6.4% rise observed in June.

In addition, price increases for food purchased from restaurants have been slowing. In the 12 months to July, they rose 3.4%, following increases of 3.6% in June and 4.0% in May.

Provinces: Year-over-year consumer prices down in eight provinces

Consumer prices declined in eight provinces between July 2008 and July 2009.

The main downward contributors in all provinces were price declines for gasoline and other energy components. In most provinces, the main upward push came from rising prices for various food items.

Consumer prices declined at the fastest pace in British Columbia (-1.6%) and Alberta (-1.5%).

In British Columbia, the two main factors in the 12 months to July were a 23.9% decrease in energy costs and a 13.6% drop in homeowner's replacement costs.

In Alberta, prices were down for the fourth consecutive month. The main factor was a 4.4% decrease in shelter costs in the 12 months to July, more than twice the national decline of 2.0%. This was due mainly to a 48.1% drop in natural gas prices and a 10.8% decline in homeowner's replacement costs. As well, electricity prices fell 15.6% in the 12 months to July.

Saskatchewan was the only province to experience an overall price increase (+0.9%). This was due to a 6.6% rise in costs for food and stronger increases in costs for shelter.

In Central Canada, consumer prices in Ontario fell 1.2%. Energy prices in Ontario fell 24.3% between July 2008 and July 2009. In Quebec, consumer prices fell 0.3%.

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

The Bank of Canada's core index advanced 1.8% over the 12 months to July, following a 1.9% rise posted in June.

The seasonally adjusted monthly core index posted no change from June to July, after increasing 0.2% from May to June.

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-X, free) from the Publications module of our website.

The July 2009 issue of The Consumer Price Index, Vol. 88, no. 7 (62-001-X, free), is now available from the Publications module of our website. A paper copy is also available (62-001-X, $12/$111). A more detailed analysis of the CPI is available in this publication. See How to order products.

The August Consumer Price Index will be released on September 17.

For more information, or to enquire about the concepts, methods or data quality of this release, contact the Dissemination Unit (toll-free 1-866-230-2248; 613-951-9606; fax: 613-951-2848; prices-prix@statcan.gc.ca), Consumer Prices Division.