Here is how Statistics Canada opened its commentary on the consumer price index June 22.
“Consumer prices rose 1.2 percent in the 12 months to May, following a two percent increase in April. This 0.8 percentage point difference was mostly attributable to declines for gasoline prices.”
Apparently, gasoline prices dropped 2.3 percent, following 22 months of increases. Really?
You would not have suspected a drop significant enough to bring down the CPI based on the pump prices I have seen, and I suspect it’s not much different wherever you are. The last price I drove by last week was still $1.259 per litre.
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I would not mind higher pump prices quite so much if the oil price was holding up its end, which is an important economic factor in Saskatchewan and Alberta. But oil prices have been sagging for weeks and managed to duck under 80 bucks June 22 on the NYME. Brent crude was holding up at about $90 per barrel. In theory, oil has fallen 20 percent in the last year, not 2.3 percent.
We’ve heard it all before. Despite a falling oil price, there’s not enough refinery capacity, or there’s plenty of gas in the pipeline that was refined at an earlier, higher price. There’s always a great reason why pump prices fall much more slowly than the oil price.
The falling oil price is obviously not a good sign of a recovering global economy. Slower growth in China, a U.S. recovery that is at best limping along and the debt-mired disaster that is the euro zone are making things look a little less wonderful every day that goes by.
If you want to look at the bright side, however, that little (or large) pile of debt is not about to grow any time soon, unless one blows more cash on a new chunk of land.
There is no way Bank of Canada governor Mark Carney is about to throw Canadians to the interest rate wolves with all this going on. His latest view was that there was a “sharp deterioration in financial conditions,” and that was before oil dropped below $80.
For now, I’ll take lower gas prices, if and when they ever come, and a cheap mortgage. But this economy is eventually going to bite us if the Europeans don’t pull it together.
