Today's Report (10/20/2021)

The Consumer Price Index (CPI) rose 4.4% on a year-over-year basis in September, the fastest pace since February 2003 and up from a 4.1% gain in August. Excluding gasoline, the CPI rose 3.5% year over year in September.

The monthly CPI rose 0.2% in September, the same growth rate as in August. Month-over-month CPI growth has been positive for nine consecutive months. On a seasonally adjusted monthly basis, the CPI rose 0.4%.

Prices rose year over year in every major component in September, with transportation prices (+9.1%) contributing the most to the all-items increase. Higher shelter (+4.8%) and food prices (+3.9%) also contributed to the growth in the all-items CPI for September.

What Is It?

It measures the changes in the price of goods and services and is viewed as the best measure of the underlying inflation rate by most economists.

What Is The Fundamental Effect?

The Central Bank pays close attention to the figure as its role of maintaining price stability. If goods and services increase over time but the income of consumers do not, consumers will have weaker buying power since the value of their money decreases in comparison.

What Effect Does It Have On The Market?

CURRENCY - Because Canada imports a lot, prices for many goods rise when Canada experiences inflation.

STOCKS - Inflation may actually help equity investors by supporting rising stock prices. However higher prices for goods may lead consumers to forgo some purchases as prices rise, and budgets are constrained. This can harm profits and drive prices lower.

BONDS- As inflation grows, bond investors suffer when their borrowers pay them back in a currency that becomes worthless over time.

Canadian Core CPI

This excludes the unstable components, food, and energy.