The Daily — Consumer Price Index: Annual review, 2023 (2024)

Released:2024-01-16

The Consumer Price Index (CPI) rose3.9% on an annual average basis in2023, following a40-year high increase of6.8% in2022and a3.4% increase in2021. Aside from2022, the annual average increase in2023is the largest since1991. Excluding energy, the annual average CPI rose4.5% in2023compared with5.7% in2022.

While prices rose in every major component on an annual average basis in2023, price growth slowed in six of eight components compared with2022. The transportation component (+0.9%) slowed the most as a result of lower gasoline prices, with notable decelerations also seen in the food (+7.5%) and shelter (+5.6%) components.

Price growth for goods eased to3.2% in2023, down from8.7% in2022, amid the continued easing of supply chain pressures. Prices for gasoline, natural gas and food contributed to a slowdown in non-durable goods (+4.0%). Prices for durable goods also increased at a slower pace in2023(+1.5%) compared with2022(+6.2%), led by passenger vehicles amid improved supply chains and inventories compared with2022as the supply of semiconductors continued to improve. Lower prices for furniture and household appliances also contributed to the deceleration.

While price growth for goods slowed5.5percentage points in2023, price growth for services only slowed0.4percentage points, resulting in a4.6% increase. Deceleration in homeowners' replacement cost and other owned accommodation expenses due to base-year effects was almost entirely offset by acceleration in mortgage interest cost, and to a lesser extent, rent.

Despite showing a decelerating trend since January2023, year-over-year price growth in the all-items CPI hovered between3% and4% for the last six months of2023.

Energy prices lead the deceleration in the Consumer Price Index

Deceleration in the annual average headline inflation was led by lower energy prices, which fell4.2% on an annual average basis in2023following a22.5% increase in2022. The slowdown in energy prices was led by gasoline prices, which fell7.6% in2023after a28.5% increase in2022when crude oil prices rose due to a number of factors, including supply uncertainty resulting from Russia's invasion of Ukraine as well as higher global demand as travel increased amid easing COVID-19restrictions.

Prices for fuel oil, which are also related to crude oil prices, fell in2023(-11.2%) compared with2022(+59.6%).

Natural gas prices declined4.2% in2023following a26.9% increase in2022, when commodity prices increased amid sustained global demand and uncertainty in global energy markets. In2023, however, consumer natural gas prices eased with commodity prices.

Price growth for food slows, but remains elevated in2023

Prices for food purchased from stores rose7.8% on an annual average basis in2023. While this was a smaller increase than in2022(+9.8%), it was still larger than the annual average increase in the all-items CPI. Grocery price inflation remained broad-based in2023with a number of contributing factors, including poor weather in growing regions, higher input costs, diseases such as bird flu and African swine fever, and Russia's invasion of Ukraine. Among the grocery products with the largest price increases were edible fats and oils (+16.9%), preserved fruit and fruit preparations (+11.5%), bakery products (+10.7%), cereal products (+10.0%) and preserved vegetable and vegetable preparations (+9.7%).

Although grocery price levels remained elevated, they were relatively stable over the course of2023, causing year-over-year growth to decelerate in all but two months, after peaking in January2023.

Consumers also paid6.5% more to eat at restaurants on an annual average basis in2023following a similar increase in2022(+6.7%).

Homeowners' replacement cost and other owned accommodation expenses decelerate, while mortgage interest cost and rent accelerate

On an annual average basis, shelter prices rose at a slower pace in2023(+5.6%) compared with2022(+6.9%). The slowdown stemmed from deceleration in homeowners' replacement cost (+0.1%) and other owned accommodation expenses (-1.0%), attributable to the cooling of the housing market amid a higher interest rate environment.

At the same time, higher borrowing costs contributed to faster annual average price growth for mortgage interest cost and rent. The mortgage interest cost index rose28.5% in2023, the largest increase on record, as more mortgages were initiated or renewed at higher interest rates. This index was the largest upward contributor to the annual average all-items CPI in2023.

Consumers also paid6.5% more for rent in2023following a4.6% increase in2022. In addition to increased immigration, a higher interest rate environment may have stimulated rental demand by increasing the potential cost of homeownership.

Regional highlights

Annual average prices rose in all provinces in2023, but at a slower pace than in2022.

Products

The Consumer Price Index Data Visualization Tool is available on the Statistics Canada website.

More information about the concepts and use of the Consumer Price Index is available in The Canadian Consumer Price Index Reference Paper (Catalogue number62-553-X).

Contact information

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