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March 19, 2024ANALYSIS OF CONSUMER PRICE INDEX FOR FEBRUARY 2024 Nova Scotia’s all items Consumer Price Index (CPI) increased 2.8% year-over-year in February 2024, down from a pace of 3.0% year-over-year in January. February all items CPI was up 0.5% compared the previous month.
Nova Scotia's inflation had been slowing after peaking at 9.3% in June 2022. Inflation started to accelerate again in July 2023, particularly due to gasoline prices, as the large monthly drop in July 2022 is no longer included in 12-month calculations while Federal carbon charges came into effect over the summer. Compared to last fall when OPEC cuts resulted in higher energy prices, energy price inflation has slowed. Shelter price growth has also slowed but remains elevated.
Nationally, consumer prices increased 2.8% year-over-year in February 2024, down from 2.9% in January. Inflation was highest in Alberta and Québec and slowest in Manitoba. Statistics Canada noted that decelerations in the indexes for cellular services, food purchased from stores, and internet access services were notable contributors to the year-over-year deceleration in February. These contributions were partially offset by an increase in the gasoline index.
The most significant upward contributors (combining price increase as well as share of the consumption basket) to Nova Scotia's 2.8% year-over-year inflation were: rent, mortgage interest cost, electricity, food purchased from restaurants, and gasoline.
The largest downward year-over-year contributions were from: fuel oil and other fuels, telephone services, recreational equipment and services (excluding RVs), men's and women's clothing.
On a monthly basis, Nova Scotia's all items CPI was up 0.5% from January to February 2024. National prices were up 0.3% with increases reported for all ten provinces. Prince Edward Island reported the fastest percentage growth on a monthly basis. Ontario reported the slowest monthly increase.
Major upward contributors to Nova Scotia's monthly consumer prices were: gasoline, travel tours, rent, household appliances, fuel oil and other fuels. There were downward contributions from fresh or frozen beef, clothing accessories, watches and jewellery, purchase and leasing of passenger vehicles, women's clothing, and telephone services.
Energy prices play a significant role in inflation rates. Nova Scotia's energy prices were up 2.8% from February 2023 to February 2024. Year-over-year energy prices were up 1.3% nationally with three provinces reporting higher energy prices. Alberta reported the fastest growth (followed by Nova Scotia) while Manitoba reported the largest decline.
On a monthly basis, Nova Scotia's energy prices increased 2.5% from January to February 2024. National energy prices were up 2.8% with all provinces reporting higher prices compared to the previous month. Alberta reported the largest monthly increase in energy prices due to an acceleration in natural gas prices, while Ontario posted the smallest monthly increase.
Because fuel oil for home heating is a larger component of Nova Scotia's consumption basket than in other provinces, Nova Scotia's energy prices (and overall inflation) are more sensitive to fluctuations in the global price of crude oil. Nova Scotia's energy prices accelerated dramatically after Russia's invasion of Ukraine in March 2022. Nova Scotia energy prices peaked in June 2022, and then trended down before rising substantially in October and November 2022 as the Organization of Petroleum Exporting Countries cut production to raise global oil prices. Energy prices in Nova Scotia rose again in August and September 2023 following the introduction of the federal carbon levy in July. Since then, energy prices have declined or grown at a slower pace as these events fall out of the calculation for inflation.
Nova Scotia's year-over-year price decline for fuel oil was 12.6%. Gasoline prices increased 6.1% compared to a year ago.
Food price inflation was 4.5% in Nova Scotia (February 2024 vs February 2023). National food prices increased 3.3% in February. Food prices were up in all provinces; the Atlantic Provinces reported the highest food price inflation while Ontario reported the slowest food price growth. All provinces except Prince Edward Island reported a deceleration in year-over-year food price inflation in February 2024.
On a monthly basis, Nova Scotia's food prices declined 0.1% from January to February. National food prices were unchanged with four provinces reporting higher prices on a monthly basis. The fastest growth was in Prince Edward Island while Manitoba and Saskatchewan reported the largest monthly declines.
Food and energy prices are heavily influenced by volatile global commodity markets. Nova Scotia's underlying inflation rate excluding food and energy was 2.4% from February 2023 to February 2024. Nationally, inflation excluding food and energy was 2.8%. Quebec reported the fastest growth while Prince Edward Island reported the slowest growth in inflation excluding food and energy prices.
On a monthly basis, Nova Scotia's inflation for all items excluding food and energy was up 0.5% from January to February 2024. Nationally, prices for all items excluding food and energy were up 0.2% with increases in all provinces except New Brunswick. Prince Edward Island reported the fastest monthly increase while New Brunswick reported unchanged prices.
Year-over-year shelter cost inflation was 5.0% in Nova Scotia in February 2024, down from 6.4% in January. In February 2024, rising shelter costs contributed more to all items inflation in Nova Scotia than energy prices. National shelter prices were up 6.5% with increases in all provinces. Alberta reported the largest year-over-year increase in shelter prices while Prince Edward Island reported the slowest increase.
Monthly shelter costs were up 0.6% in Nova Scotia from January to February 2024. Nationally, shelter costs were up 0.4% with increases in all provinces. Alberta reported the fastest monthly growth in shelter prices and British Columbia reported the slowest growth.
Among detailed food products with available data, Nova Scotia's year-over-year inflation was fastest for fats and oils, followed by sugar and confectionary and preserved fruit. The largest year-over-year price decline was for fish/seafood.
In detailed shelter cost components, electricity reported the fastest year-over-year price increase, followed by rent. Fuel oil reported the largest year-over-year decline.
Household operations/furnishings costs were down 1.2% overall. Prices fell fastest for telephones and utensils/tableware/cookware. The largest increases were in internet and cleaning products.
Overall transportations costs were up 2.6% year-over-year in February. City bus had the largest decline while gasoline had the largest increase.
Health and personal care costs were up 5.3% year-over-year on gains in all sub-components led by personal care services.
Clothing and footwear prices were down 6.9% year-over-year in February with declines in all sub-components except clothing materials and services.
Nova Scotia's overall prices for recreation, education and reading were up 2.5% from February 2023 to February 2024, with faster increases for travel services/accommodations and purchase/operation of recreational vehicles. Prices declined from the previous year for recreational equipment/services (excluding RVs).
Nova Scotia's prices for alcohol, tobacco and recreational cannabis were up 3.6% year-over-year with growth in all categories. Alcohol from licensed establishments had the largest increase.
Trends
Since the start of the Bank of Canada's inflation-targeting monetary policy regime, inflation for all items has generally been in the 0-4% range. Periods of above target inflation are typically followed by periods of slow price growth or declines. The most recent acceleration in inflation was the strongest since the inflation-targeting era began, though this inflation is starting to fade with tighter monetary policy and lower commodity prices.
Many of these periods of accelerated and slowed inflation are attributable to volatile commodity prices, especially energy prices. Once the more volatile commodity prices are excluded, inflation in Nova Scotia has largely been below 2% for much of the last 20 years. However, the recent rise in inflation through 2021-2023 spreads beyond commodity prices, resulting in the longest period under the Bank of Canada's inflation-targeting regime with Nova Scotia's CPI excluding food and energy above 3%.
The Bank of Canada examines 'core' measures of inflation that are intended to remove the effects of volatile components and capture underlying inflation trends that are more connected to capacity in the Canadian economy. Core measures of inflation may also indicate where all items inflation is headed.
Canada's core measures of inflation remained mostly at or below the Bank's target of 2% for over a decade prior to 2021. However, after prices accelerated in 2022, core inflation measures also started to rise, peaking at over 6% for the CPI-common measure before declining. Compared to the previous month, year-over-year core inflation measures in February 2024 were down for all core measures: CPI-common (3.1%), CPI-median (3.1%), CPI-trim (3.2%), CPI-core (2.1%).
Source: Statistics Canada. Table 18-10-0004-01 Consumer Price Index, monthly, not seasonally adjusted; Table 18-10-0256-01 Consumer Price Index (CPI) statistics, measures of core inflation and other related statistics - Bank of Canada definitions
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