|
Call Now! 1-866-932-8412 or
Email: info@mortgagegirl.ca |
Statistics Canada has just released its Consumer Price Index for June that shows that prices rose 1.0% in the 12 months to June, following a 1.4% increase in May.
Energy prices rose 1.3% between June 2009 and June 2010, after increasing 6.2% over the 12 months ending in May. Excluding energy, the Consumer Price Index (CPI) advanced 0.9% in June, following a 1.0% increase in May.
The price of gasoline decreased 2.9% in June compared with the same month a year earlier, after rising 6.9% in May. This was the first year-over-year drop in prices at the pump since October 2009.
Natural gas prices increased 3.0% in June, after rising 4.7% in May. This was the third consecutive advance following several months of decline.
Electricity prices rose 5.8% in June following a 4.0% advance in May.
Prices for the purchase of passenger vehicles rose 2.8% in June, following a 5.1% increase in May.
On a seasonally adjusted monthly basis, consumer prices fell 0.2% in June, the same rate of decrease as in May. Both the transportation and the clothing and footwear indexes fell 0.7% while food prices decreased 0.1%.
Prices increased in seven of the eight major components of the CPI in the 12 months to June; the only exception was clothing and footwear.
Shelter costs rose 1.6% in the 12 months to June, after increasing 1.3% in May. Homeowner’s replacement costs rose 5.2% following a 4.4% increase in May. In addition to paying higher prices for natural gas and electricity, consumers also paid more for rent.
On the other hand, the mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, declined 5.0% in June, following a 5.4% decrease in May.
Despite the year-over-year decline in gasoline prices, transportation costs rose 1.0% in the 12 months to June after increasing 4.1% in May. In addition to paying higher prices for the purchase of passenger vehicles, consumers also paid 5.3% more for passenger vehicle insurance premiums.
Consumers paid 1.2% more for household operations, furnishings and equipment. This increase followed a 0.9% rise in the 12 months to May. Higher prices were recorded for telephone services and child care. Costs for financial services fell 2.8%.
Food prices went up 0.7% in June following a 0.8% increase in May. The increase in June was the smallest since March 2008. Prices for food purchased from restaurants rose 1.8% while prices for food purchased from stores increased 0.1%. Prices increased for sugar and confectionery, tomatoes and lettuce, while prices for oranges and potatoes fell.
Prices in the health and personal care component were up 1.7%. Prices for oral-hygiene products and dental care increased.
In the recreation, education and reading component, prices rose 0.4% after falling 0.2% in the 12 months to May. Consumers paid more for cablevision and satellite services. However, prices for video equipment and computer equipment and supplies fell.
Prices for clothing and footwear declined 1.8%. In this component, lower prices were recorded for women’s and children’s clothing.
Apart from Manitoba, consumer prices rose in all provinces in the 12 months to June, but at a slower pace than in May. Prices at the pump fell in most provinces.
The fastest rate of change occurred in Ontario where consumer prices rose 1.6%. Prices for the purchase of passenger vehicles were up as were passenger vehicle insurance premiums. Ontario consumers also paid more for electricity and telephone services.
In Manitoba, consumer prices decreased 0.2% in the 12 months to June, following a 0.5% increase in May. Lower prices for gasoline, natural gas and home and mortgage insurance were recorded in this province.
In British Columbia, prices advanced 0.5% in June, following a 0.6% increase in May. Electricity prices rose 21.7% while prices for home and mortgage insurance declined.
The Bank of Canada’s core index advanced 1.7% in the 12 months to June, following a 1.8% rise in May. Price increases were recorded for the purchase of passenger vehicles, passenger vehicle insurance premiums, homeowner’s replacement costs, electricity and telephone services.
The seasonally adjusted monthly core index increased 0.1% in June, after increasing by the same amount in May.
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; cpd-info-dpc@statcan.gc.ca), Consumer Prices Division
By Sunny Freeman,
The Canadian Press
TORONTO – Recession-battered Canadians are growing more conservative with their money and turning away from high risk investments to the safety of savings accounts — a trend that banks are cashing in on, industry insiders say.
Canadians this year have opened about 20 per cent more chequing and savings accounts than last — a giant leap from the average three to five per cent annual increase, said financial services consultant David McVay.
“Canadians are more conservative than they were in 2007,” McVay said, adding that more consumers are paying off debt, opening RRSPs and tax-free savings accounts than they were a year ago.
“We’re seeing a shift from stock investing into keeping more money in savings accounts because of the financial crisis,” he said.
The shift to safer investments is being driven by a nervous baby boom generation who “have lost their mojo” after the plunging stock market wreaked havoc on their retirement investments, McVay said.
They no longer want to take on the risk of a crash that could force them to work another five or 10 years.
“The banks are marketing to the uncertainty that Canadians have about their savings and retirement plans caused by the financial crisis,” McVay said.
Banks are looking to capitalize on the conservative shift in consumer sentiment because they can make more money from savings accounts than they can when stocks and bonds are in vogue, he added.
The 20 per cent increase in retail accounts amounts to about $100 billion in business — and Canadian banks are fighting aggressively for customers with cash-back and points incentives, McVay said.
TD Bank economist Grant Bishop agrees that the trend away from risky equity markets has increased competition for deposits.
“You did see banks increasing the attractiveness in order to get the largest bulk of that cash flowing in,” Bishop said.
But the rush into precautionary savings during the initial phases of the recession, has since dropped off, he added.
As the early stages of recovery took hold, consumers began to take advantage of historically low interest rates and favourable borrowing conditions.
“We did see households, spurred by ultra-low interest rates, accumulating debt, largely for the purpose of home ownership,” he said.
“But going forward that does need to slow and households do need to save more in order to rebalance their finances and bring down the potential vulnerabilities that households would face as interest rates rise.”
As interest rates on loans begin a cycle of gradual hikes, borrowing will become more expensive. As the same time, that should eventually translate into higher interest on savings accounts.
Scotiabank released results of a survey of Canadians’ savings habits Tuesday that found nearly one-third of Canadians do not have a savings plan in place even though almost everybody —94 per cent— said they feel better when they have a safety net of savings.
That means there is still a large untapped market of Canadians who are looking for help with their savings.
“We did have a tough period in the last few years and I think now is a great time to really focus on this and get people thinking about how they can save,” said Gillian Riley, Scotiabank senior vice-president of retail deposits, payment and lending.
“Over the last year we certainly have seen some movement towards savings as a flight to safety,” Riley added.
About 55 per cent of the 1,000 Canadians surveyed by Harris/Decima for Scotiabank in March told pollsters they save on a regular basis. Still, nearly one-in-five Canadians said they don’t have any rainy day savings at all.
Household consumption had been growing at a faster rate than income growth, indicating that Canadians were taking on more debt to fuel domestic spending, Bishop said, adding that TD predicts that the pace of credit growth will slow in the near future.
The personal debt to income ratio has climbed dramatically in the past year, Bishop said. It sits at around 147 per cent, meaning for every dollar of income households earn, they hold about $1.47 in debt.
“That reflects that households still do need to save a larger portion than they were during the pre-recession period … in order to pay down debt.”