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Summary
- The prices of durable goods, gasoline rose by 1.7 per cent and 6.1 per cent, in January.
- Oil prices surge as global production cuts hit supplies.
- People spent more on phones and talk plans, a trend that continued from previous months.
Canada’s Consumer Price Index (CPI), a key gauge of inflation, has risen at a quicker pace in January to 1 per cent, than in the previous month, due to the rising prices of gasoline and consumer durables, the government’s statistical organization, Statistics Canada said in a release.
The December CPI was 0.7 per cent. According to the latest data, the prices of durable goods and gasoline rose by 1.7 per cent and 6.1 per cent, respectively, compared with the figures in December.
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Cold Weather Spike Fuel Demand
A severe cold wave across North America this winter has spiked the demand for fuel and natural gas. But the supplies have not been consistent with the demand, which drove up the prices.
The weather, however, has gone from bad and to worse over the weekend, cutting out essential fuel and power supplies that keep the homes warm, especially in neighboring Texas and Mexico. Canada has also experienced severe cold, but the disruptions were not as severe as the US.
The data also show that if the gasoline is removed from the list of the items, the January CPI figure would be 1.3 per cent which would be an increase of 1.0 per cent from the number in December.
The seasonally adjusted monthly CPI rose 0.4 per cent in January, the Statistic Canada said.
The data also reflected the state of the Canadian economy now. Although there has been an uptick in demand and mood for spending, the widespread disruptions in the global supply chains due to the pandemic would push the recovery period longer. But there have been also signs of a rebound. Consumer prices have been steadily climbing up since April.
Oil Prices Surge After Falling Demand
However, the biggest jump in prices was seen in the energy sector. Fuel prices rose for the second consecutive month in January, rising to 6.1 per cent compared to the December figure. This was largely due to production cuts by major oil-producing countries as the demands fell.
However, the prices were still lower by 3.3 per cent compared to the corresponding period of 2020.
The oil sector has also been hit by the renewable energy trends sweeping the globe, especially in the developed countries of Europe and North America, where policymakers are cutting back on oil investments and placing new infrastructure for the transition to renewables by 2035.
According to Statistics Canada, vehicle prices have also gone up during the period, rising at a quicker pace of 2.9 per cent, driven by the new models being launched in the markets.
Pic Credit: Pixabay.
Meat & Vegetable Prices Stable
On the other hand, prices of meat and vegetables grew slowly in January. Meat prices grew at a pace of 1.2 per cent, lower than the pace registered in the previous month. Vegetable prices grew by 0.2 per cent, lower than a 1.1 per cent increase in December.
Lower meat and vegetable prices can be attributed to their abundance due to the export cuts to the US and Mexico, where local productions have increased.
The data also showed that people spent more on buying new phones and talk plans. Sales of these items rose by 3.4 per cent during the period, the highest monthly growth since September 2020. The telephone services segment has also witnessed growth, rising by 4.2 percent in January.
Aviation, Power See Varied Impact
In the aviation sector, airfares were down 5.5 per cent in January, a year-over-year decline. The continued COVID-19 restrictions have had a devastating impact on the sector.
The Electricity costs had also witnessed a varied decline in the provinces during the period. In Ontario, the prices were down by 4.4 per cent which was most pronounced among the provinces.
