April 23, 2008
Economy at a Glance - April 24, 2008
Canada's inflation rate continues to slide
Consumer Price Index (CPI) results for March 2008 were recently released in both Canada and the U.S. The “all-items” inflation rate for Canada in the latest month was only 1.4% year over year. The corresponding U.S. figure was nearly three times as high at 4.0%. While U.S. inflation, absent food and energy, was more restrained than the overall rate (2.4% versus 4.0%), Canada’s “core” inflation rate was still a good deal lower at only 1.3%.
Canada has been a lucky anomaly on the food price front. The food sub-component of Canada’s CPI is ahead by only 0.4% compared to last year. There have been two major reasons. First, frost in California last year caused 2007 import prices to be high. Second, the large increase in value of the Canadian dollar, this year versus last year, has meant significant drops in prices for imported fruit (-11%) and vegetables (-18%).
Food and beverage costs are +4.4% in the U.S., which may actually be relatively mild compared with many other countries around the world. Food riots over shortages and high prices have broken out in many locations, most frequently in less developed nations. Dairy and related product prices in the U.S. are +11.0% on a year-over-year basis and cereals and bakery products are +8.1%. The latter is due to the largest price jump for wheat in 25 years. No. 1 grade wheat now costs twice as much as it did a year ago.
Where both economies are seeing dramatic price relief is in imports of consumer goods from countries outside North America, mainly Asia. For example, prices for apparel in the U.S. are -1.4% year over year and the clothing and footwear sub-index in Canada is -1.5%. Prices for computer equipment and supplies are -12.0% in the U.S. and -15.0% in Canada.
For more articles by Alex Carrick on the Canadian and U.S. economies, visit his blog and Market Insights.
Canada Inflation: All Items CPI vs CORE
(Not seasonally adjusted)
Data source: Statistics Canada/Chart: Reed Construction Data - CanaData.
U.S. Inflation: All Items (CPI-U) vs All Items Less Food and Energy
Not seasonally adjusted)
Data source: U.S. Bureau of Labor Statistics (Department of Labor/Chart: Reed Construction Data - CanaData.
