BC has recently seen some volatility in the monthly inflation numbers. The July all-items Consumer Price Index (CPI) was up 1.4% from one year ago, which was well below the 1.9% year-over-year increase recorded in June. So far in 2014 inflation has been trending higher after a period of very little change over the second half of 2013. But inflation pressures eased in July.
For Canada as a whole, total CPI inflation reached 2.1% in July. Among the provinces, BC had the lowest inflation rate last month, followed by Manitoba. Alberta, Saskatchewan and Ontario all posted a 2.5% y/y increase in the all-items CPI in July. Nationally, inflation was pushed up by rising costs for shelter, food and alcoholic beverages. Compared to other provinces, BC experienced less upward pressure on shelter costs in July. Shelter-related costs account for more than one-quarter of the all-items CPI basket [see Table 1]. Higher costs for food have been a key factor behind mildly higher BC inflation readings in 2014.
Economic forecasters expect inflation in BC to stay in the vicinity of 2% (or less) in both 2014 and 2015, with BC likely to continue to trail the average Canadian inflation rate. The current slow-growth economy suggests little sustained pressure on prices/wages. One factor that will affect inflation in the coming months is the lower Canadian dollar, which promises to boost the prices of many imported goods. That may contribute to a slight uptick in BC's measured inflation rate by 2015.
Components of the All-Items Consumer Price Index
|(% of total CPI basket)|
|Household operations and products||12.66%|
|Clothing and footwear||5.82%|
|Health and personal care||4.93%|
|Alcohol and tobacco products||2.79%|