It used to be one of the most dreaded and hated economic indicators around. But these days overall consumer price inflation is little more than a whimper - even if shoppers are seeing some sticker shock in the grocery stores.

Statistics Canada reported yesterday that inflation as measured by the Consumer Price Index (CPI) rose by a mere 1.0 per cent in Alberta - tied with British Columbia and New Brunswick for the lowest in the land.

Nationally, consumer prices rose 1.2 per cent from August of last year, following a 1.3 per cent annual gain in July. Higher prices for the purchase of passenger vehicles, gasoline, meat and food purchased from restaurants were major factors in the year-over-year increase of the August number.

Core inflation - a special measure used by the Bank of Canada that removes eight of the most volatile categories of items from the basket of consumer goods - was not much stronger. It rose by 1.6 per cent year over year. The Bank of Canada targets a core rate of inflation of 2.0 per cent.

Following some of the price trends in the rest of the country, shoppers in Alberta paid more in August for fresh fruit (+7.1 per cent), meat (+5.6 per cent) and alcoholic beverages (+3.7 per cent). On the other hand, steep price deflation drove prices lower for natural gas, which fell 22.7 per cent. Prices also fell for electricity (-3.2 per cent) and men's clothing (-2.5 per cent).

The very weak CPI report in August will confirm for the Bank of Canada that it is correct in holding interest rates unchanged. With barely a whiff of consumer price inflation and rates continuing to be held at record lows in the U.S., interest rates on this side of the border will probably stay low for quite some time to come. (EDITOR'S NOTE: But read Inflation temptation an easy answer for politicians to understand what even a low annual inflation rate can do to your pension.)

Automotive
There were a couple of data releases this week that likely caught the attention of those caught up in the marathon bargaining sessions in Toronto between the Canadian Auto Workers and the big, American-based auto manufacturers.

According to Statistics Canada, the number of new cars sold in Canada is climbing, with total new vehicle sales through July up 7.3 per cent over the same seven month period in 2011 (sales in Alberta over the period have been particularly impressive, up 12.9 per cent).

The automotive consultant group Des Rossier also released numbers this week, reporting sales for August. According to the consultants, total light vehicle sales increased 6.7 per cent to date in 2012.
Interestingly, the consultant report also breaks down sales figures by the manufacturer. Year-to-date sales of GM/Ford/Chrysler vehicles saw no gain over 2011. The other way of saying this is that imported brands accounted for all of the jump in 2012.

While the high dollar makes it more expensive to produce in Canada, clearly, it also makes it easier for foreign auto dealers to sell in Canada.
U.S.

The American unemployment rate has remained stubbornly high, which is unfortunate, but it's a result of the economy not growing fast enough. This week the economic news was once again mixed.

Increasingly, it looks like the U.S. housing market is in the nascent stage of recovery. Housing starts for August came in at 750,000, which is 28 per cent higher than in 2011. Not only are housing starts up, but the National Association of Home Builders' housing market index jumped to its highest level since 2006, indicating that more builders are growing confident about a housing recovery.
While housing-related news continues to be more upbeat, manufacturing news hit some down notes. Two measures of general sentiment in the sector were released this week, the Empire State Manufacturing Survey (focusing on New York) and the Markit Flash survey (all U.S. manufacturers). These surveys gauge sentiment of industry executives. Did they see more orders coming in that month? Are they bullish about more activity in the coming weeks? Unfortunately, the indicators were decidedly lower across the board in September.

Jobs
EI claims edged down slightly in July from August, and now sit at 508,000. While the month-over-month decline was only 1,000 individuals, there were 35,000 fewer claims being made, year over year. EI claims in Alberta, by contrast, moved up by 2,000 in July to 26,000 claims.
The labour market in Canada has cooled in recent months, so the fact the number of EI beneficiaries is no longer dropping doesn't really come as a surprise. Nonetheless, the current number of beneficiaries is actually pretty low, with the number of beneficiaries remaining at just about where it was prior to the onset of the recession.

Agriculture
The United States Department of Agriculture (USDA) looked at how total factor productivity was improving around the world in a recent study. Agricultural land in developed nations has consistently had better yields than in developing nations. This is due mostly to the money available for fertilizers, machinery and irrigation technology, not to mention better infrastructure. The study found that productivity grew particularly fast in China, Brazil and Russia.

Energy
The Energy Information Administration (EIA) in the United States published a concise document on Alberta's energy sector this week. The document is quick to highlight the fact that business and political leaders are keen to lessen Canada's trade dependence on the United States, especially for crude oil. When it comes to trade in natural gas, the agency contends that Canada will have to diversify its trade as a consequence of the reduced demand for imports in the United States, as shale gas developments greatly increase domestic American supply.

Housing
Rising home prices are great for owners who see their equity rise, but the real impact on the broader economy is when the higher prices induce builders to break ground on new projects. After investment in the oil and gas sector, the most important source of investment spending in Alberta is residential construction.

Investment in new residential construction hit $706 million in July, slightly lower than the recent high of $731 million recorded in April, but still 32 per cent higher than in July 2011. The last time housing investment was this high was around the time of the federal government's 2009 stimulus bill, in which housing was directly targeted.