Thank you, Mr. Chair and finance committee members. It's a pleasure to be here today with our team.
Since we last spoke to this committee in January, domestic and international challenges have continued to impact supply chains and associated costs.
We're all in a state of high alert due to the many uncertainties and risks around us. In this climate, Statistics Canada takes its job of anchoring Canadians to the facts more seriously than ever.
Our consumer price index continues to be a robust mechanism to gauge the impact of global and domestic events on consumer inflation and Canadians’ changing consumption patterns.
In our last appearance before the committee, we told you that the consumer price index, the CPI, increased 4.7% year‑over‑year as of November. That figure has climbed to 5.1% in January and 5.7% in February. We haven't seen gains this large in 30 years. The price increases are broad‑based, with the biggest drivers being gasoline, food, supply chain issues, and a heated housing market.
Allow me to provide some specific updates.
Gas prices jumped almost 7% between January and February in the wake of increased demand and Russia's invasion of Ukraine. Canadian motorists paid a third more at the pump compared to last February. If we took gas out of the equation, this February's CPI would be a full percentage point lower.
Grocery bills are rising fast, too. We saw a 6.5% increase in January and another 7.4% in February. That's the largest year‑over‑year leap since 2009. Rising input prices and transportation costs are some of the biggest drivers. But 2021 was a particularly bad year for food production, which is where we often see climate‑related impacts.
I know this committee has concerns about housing affordability. Shelter costs rose 6.6% in February—the largest increase in almost 40 years.
Some have asked why the CPI isn't even higher given these important increases. First, the index represents a Canada-wide average, accounting for all 10 provinces as well as the northern capitals. The CPI may not always match the exact experience of individuals, households or even regions in Canada. This is because of geographic variations, along with different consumer choices.
We explained last time that the CPI is a consumption-based index that measures monthly costs of home ownership, including mortgage interest costs. It does not include the part of your mortgage payment that goes to principal, because that's considered an investment and an asset that would most likely appreciate over time.
However, the CPI is influenced by the most recent housing prices and interest rates, and we'll soon introduce enhancements, which I'll speak to shortly. The CPI also factors in price decreases in things such as mortgage interest, cellular services, car insurance and child care costs, following the introduction of new child care grants in certain provinces. It factors in quality improvements in items that may be outpacing their prices.
Statistics Canada is committed to keeping the CPI current and relevant. For our next release in April, a new data source for resale house prices, in addition to the new housing price index, will be used in the calculation of mortgage interest costs. This change will improve the timeliness and coverage of resale housing prices in the CPI.
We're also sharing best practices and aligning with international bodies on how to approach the measurement of housing in CPIs, and looking at how to leverage our other housing indicators. Expenditures on used vehicles are already captured in the CPI, with new vehicle prices serving as a proxy. We'll soon publish our plan to introduce used vehicle prices into the CPI, and here we'll be inviting user feedback.
On June 15, we'll conduct our annual update of basket weights used to calculate the CPI.
Looking ahead, the CPI is likely to remain elevated. Fears surrounding the global oil supply sent oil prices soaring in early March, when Russia's invasion of Ukraine escalated. We're expecting higher gas prices to have a significant effect on March's CPI unless the situation changes quickly.
The crisis in eastern Europe could also affect prices for appliances and electronics as key raw materials get more expensive and supply chain pressures increase.
Finally, since Ukraine is a major exporter of grain and vegetable oil, lower supplies of these products in international markets and shipping disruptions will likely raise the prices for many everyday foods.
With that, Mr. Chair, we'd be happy to answer any questions.