B.C. consumer price inflation surged far ahead of the national rate in September as consumers in Canada’s most westerly province grappled with a localized spike in gasoline prices.
Growth in the consumer price index (CPI) for B.C. jumped to a 7.7 per cent year-over-year pace in September from 7.3 per cent in August. In comparison, Canada’s CPI inflation fell to 6.9 per cent from seven per cent.
The cause of outsized inflation will come as no surprise to anyone in the province. While drivers elsewhere benefited from declining oil prices, supply issues from multiple refinery shutdowns in the Pacific Northwest plagued B.C. Gasoline prices rose 3.4 per cent from August and 26 per cent year over year. Gas prices have since eased.
That said, even excluding broader energy prices such as higher natural gas prices, inflation pressures remained strong at 7.1 per cent, which was higher than August’s 6.8 per cent reading suggesting stronger underlying price momentum. Growth in the cost of household essentials remained high. Food costs rose 9.2 per cent year over year, driven by a 10.3 per cent increase in store-bought foods. Restaurant meals are a relative bargain with prices up just 6.3 per cent. On the shelter front, costs were 7.5 per cent above those a year ago. The bite of higher mortgage rates and utility costs offsets some moderation in rent, while lower home prices were also a moderating factor.
Among other highlights (or lowlights), clothing and footwear prices accelerated but were still unchanged from a year ago. Recreation costs rose 6.9 per cent nudged higher by tourism. More broadly, services prices were still up seven per cent year over year but were highly geared towards shelter costs. Goods were up 8.7 per cent compared with 7.1 per cent in August, and while energy prices were a key driver, vehicle prices accelerated.
B.C.’s relatively high inflation will converge towards the national picture in October due to lower gasoline prices but will remain elevated. Inflation remains firm but will likely move lower in coming quarters as supply chain issues normalize and higher interest rates work to cool global and domestic demand.
Retail sales had a positive month for August, increasing two per cent and essentially erasing the decline seen in July. Year-over-year growth also accelerated to 5.9 per cent, higher than the 4.1 per cent seen last month. This is ahead of the national increase of 0.7 per cent for the same month. That said, given the fast-increasing change in economic conditions, Statistics Canada has given a preliminary estimate that suggests a decline in retail sales volume the following month.
Within Metro Vancouver retail sales increased 3.3 per cent in August, with year-over-year growth of 7.4 per cent. Both figures are much higher than provincial figures.
Strong growth was seen in the automotive sector, which was the main driver for the increase in sales this month. Sales there increased 26 per cent over the previous month and marked the highest amount seen this year. Automotive sales were 25.8 per cent above the previous 12-month average, so it’s unlikely this will continue in the coming months. Electronics and appliance sales also saw an increase of five per cent from the previous month, but this figure is still 4.8 per cent below the 12-month average. A decent-sized slowdown in month-over-month sales was seen in food and beverage (5.4 per cent) and general merchandise (4.3 per cent). Of the 11 retail sectors listed, five showed increases while five showed decreases and one was not available. All sales figures for the month were above their 12-month trailing average, except in electronics and clothing. •
Bryan Yu is chief economist at Central 1 Credit Union.
