The cost of goods and services rose more slowly in British Columbia than in other parts of Canada last month.
B.C.'s Consumer Price Index (CPI) increased 2% year-over-year in March – a slower pace of inflation than the national average of 2.2%.
National inflation is double the pace of year-over-year price growth in February, according to Statistics Canada, and is attributable to rising consumer confidence, gains in employment and a broad decline in prices last spring, at the onset of the country's COVID-19 crisis.
A surge in gasoline prices were a significant contributor to the latest CPI. Up more than 35% compared to March 2020, it was the largest increase in gas prices in more than 20 years – since March 2000. Growing global demand for oil this year, and the negative impact of COVID-19 on oil prices last year, explain the increase, according to Statistics Canada.
Excluding energy, Canada's CPI rose 1.1% year-over-year last month.
"The big bump in Canadian headline inflation is no surprise, and look for another large step-up next month," wrote BMO Financial Group chief economist Douglas Porter, who noted that the change is as much about price declines last year as it is about price increases now.
"Much more notable is the underlying firmness in core inflation, which is now just a heartbeat away from the 2% target – and powerful home prices are likely to soon push it over the top."
Notable upward contributors to CPI include homeowner replacement costs (+7.9%) and other owned accommodation expenses (+6%), purchases of passenger vehicles (3.5%) and food purchased from restaurants (+2.8%). Consumers also paid 11.4% more for eggs and 2.4% more for dairy products last month compared with March 2020.
Main downward contributors to year-over-year changes in CPI include declines in the cost of phone services (-17.6%), mortgage interest (-6.3%), traveller accommodation (-17.2%) and women's and men's clothing (-8.3% and -7%, respectively).
Claire Fan, economist with RBC Economics, expects CPI readings to accelerate in the near-term due to "exceptionally low" oil prices. Aside from energy, there are other underlying inflation trends worth noting.
"The supply side of the economy has been ringing the inflation bell as input prices increase. And a stronger-than-expected rebound in household spending may collide with capacity constraints to propel prices higher. We see that as a risk for later in 2021, contingent on the healthy reopening of the economy," she wrote.
On a monthly basis, CPI rose 0.5% from February to March. On a seasonally adjusted monthly basis, it increased 0.1%.