The Consumer Price Index (CPI) rose 3.4% on a year-over-year basis in December, following a 3.1% increase in November. While gasoline prices fell on a monthly basis for the fourth month in a row, the headline acceleration was largely the result of higher year-over-year prices for gasoline in December (+1.4%) compared with November (-7.7%). This was the result of a base-year effect where gasoline prices fell more on a monthly basis in December 2022 than they did in December 2023. Excluding gasoline, the headline CPI slowed year over year, from 3.6% in November to 3.5% in December.
Additional acceleration came from airfares, fuel oil, passenger vehicles and rent. Prices for food purchased from stores rose 4.7% year over year in December, matching the increase in November (+4.7%). Moderating the acceleration in the all-items CPI were lower prices for travel tours.
On a monthly basis, the CPI fell 0.3% in December, after a 0.1% gain in November. Lower month-over-month price movements for travel tours (-18.2%) and gasoline (-4.4%) contributed to the monthly decline. On a seasonally adjusted monthly basis, the CPI rose 0.3% in December.
Gasoline prices increase on base-year effect
Year over year, gasoline prices rose 1.4% in December, following a 7.7% decline in November. The increase was the result of a base-year effect, as prices fell 13.1% month over month in December 2022, when prices for crude oil were lower amid concerns of a slowing global economy.
On a monthly basis, prices for gasoline (-4.4%) fell for the fourth consecutive month in December. Continued uncertainty about oil demand and high levels of supply put downward pressure on prices.
Prices for air transportation rise month over month amid strong demand for air travel
Month over month, Canadians paid 31.1% more for air transportation in December amid strong demand for air travel during the holiday season, following a 1.1% gain in November. Prices for air transportation fell to a lesser extent on a year-over-year basis in December (-9.7%) compared with November (-17.4%), putting upward pressure on the all-items CPI.
Rent prices continue to climb
Rent prices continued to climb in December, rising 7.7% year over year, following a 7.4% increase in November. Among other factors, a higher interest rate environment, which can create barriers to homeownership, put upward pressure on the index. While rent prices remained elevated on a year-over-year basis in most provinces in December, prices in Ontario (+6.9%), British Columbia (+8.6%) and Quebec (+6.8%) contributed the most to the increase.
Rent prices in Prince Edward Island (-0.9%) fell year over year for the fifth consecutive month in December.
Passenger vehicle prices rise
The purchase of passenger vehicles index rose 2.3% on a year-over-year basis in December, following a 1.5% increase in November. The increase was led by higher prices for new passenger vehicles (+3.4%), partly attributable to the availability of new 2024 model-year vehicles.
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