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July 22, 2020ANALYSIS OF NOVA SCOTIA'S CONSUMER PRICE INDEX FOR JUNE 2020 TRENDS - JUNE 2020
In Nova Scotia, the year-over-year the All-Items Consumer Price Index (CPI) increased 0.1 per cent in June 2020. The national CPI increased 0.7 per cent year-over-year. Compared to the -0.4 per cent CPI decline in May, this is the largest change (+1.1 percentage points) in year-over-year rates since March 2011.
Monthly consumer prices increased 0.8 per cent both in Nova Scotia and nationally.
All provinces except Price Edward Island (-0.4%) had positive year-over-year inflation in June 2020. Alberta (+1.6%) had the largest CPI increase compared to June 2019, primarily due to the increase in natural gas prices (+43.9%). On a monthly basis, the CPI was up in all provinces.
National year-over-year CPI growth increased to 0.7 per cent in June following a 0.4 per cent decline in May 2020. Prices were up in five of the eight major CPI components with the increase in food and shelter prices contributing the most to the increase in the all-items CPI.
Following large declines recorded in March and April 2020, the year-over-year drop in gasoline prices slowed to 15.7 per cent in June 2020. The slower pace of decline was mainly due to higher demand as businesses and services started gradually reopening and increased local travel demand.
Meat prices increased 8.1 per cent year-over-year in June 2020, primarily because of the increase in fresh or frozen beef. The increase in fresh or frozen beef prices was the largest monthly increase since May 1982 as several large beef processing plants closed down and other plants reduced production capacity due to COVID-19.
Nationally, rent prices increased 0.6 per cent on a monthly basis while mortgage interest costs declined 0.3 per cent in June 2020. The easing of some physical distancing measures contributed to the rebound in rental prices. Mortgage prices continued to decline as major commercial banks lowered mortgage rates in response to falling bond yields and policy interest rate cuts.
Impact of COVID-19 on the Consumer Price Index
Statistics Canada continued special CPI program measures for June 2020. In-person field collection was conducted via telephone or internet and supplemented with web scraping, transaction data, and administrative data. Due to COVID-19 impact on product availability, select sub-components of the CPI received temporary special imputations. The sub-indexes for travel tours, spectator entertainment, and use of recreational facilities were imputed from the monthly change in the all-items index - effectively removing the impact of these goods and services on the CPI. Air transportation that was purchased but cancelled is excluded from calculations. Indexes for alcohol consumption in licensed establishments was imputed based on prices from stores in regions where the physical distancing measures remained in place.
The main contributors to the monthly (June 2020 vs. May 2020) NS CPI movement were:
- Gasoline (+14.5%)
- Purchase and leasing of passenger vehicles (+1.1%)
- Women’s clothing (+5.7%)
- Cereal products (excluding baby food) (-4.5%)
- Processed meat (-2.5%)
- Fresh or frozen chicken (-6.6%)
Contributors to the annual (June 2020 vs. June 2019) NS CPI movement were:
- Rent (+4.6%)
- Purchase and leasing of passenger vehicles (+2.7%)
- Fresh or frozen beef (+26.2%)
- Fuel oil and other fuels (-32.8%)
- Gasoline (-18.9%)
- Telephone service (-8.7%)
Nova Scotia's consumer price inflation (year-over-year growth in CPI) excluding food and energy was 1.4 per cent in June, compared to a national rate of 1.0 per cent. Nova Scotia and Alberta (+1.4%) reported the largest price level increases followed by Prince Edward Island and New Brunswick.
In June 2020, the CPI for food in Nova Scotia increased 3.5 per cent year-over-year. Compared to the previous month, food prices were down 0.1 per cent. Annual food prices increased in all provinces with Prince Edward Island (+4.3%) leading the price growth compared to a national average of 2.7 per cent.
The Nova Scotia energy price index decreased by 15.4 per cent compared to a year ago in June. Year-over-year energy price indexes decreased in every province with the exception of Alberta (+0.3%). The largest annual decline was in Prince Edward Island (-18.8 per cent). Monthly energy prices (June 2020 vs. May 2020) were up 5.8 per cent in Nova Scotia and 6.7 per cent nationally. All provinces experienced positive monthly energy price growth in June, with the largest increase in Ontario (9.7%).
Year-over-year, the consumer price index for shelter decreased 0.3 per cent in Nova Scotia and increased 1.7 per cent in Canada. Prince Edward Island (-2.5%) reported the largest decline in the shelter price index for June. Shelter prices were up from a year ago in all other provinces.
Nova Scotia's consumer price inflation (year-over-year growth in CPI) excluding energy was 1.7 per cent in June, compared to a national rate of 1.3 per cent. Prince Edward Island (1.9%), followed by Nova Scotia and Alberta at 1.7 per cent, reported the largest price level increases in CPI excluding energy.
Major Components for June 2020
The following table shows the price increases specific to Nova Scotia for the major components of the CPI this month:
Long Run Trends
In June 2020, the All-Items CPI year-over-year inflation rate for Nova Scotia was 0.1 per cent, below Canada's at 0.7 per cent. Nova Scotia's annual inflation has mostly been below the Canadian average since mid-2014, with the exception of only a few months. While month to month movements in the indices can be different, over time they generally follow the same overall trend. Nova Scotia’s year-over-year CPI inflation is currently at levels not seen since February 2015.
Annual inflation for the CPI excluding food and energy in Nova Scotia (+1.4%) was higher than the national rate (+1.0%) in June 2020.
Bank of Canada's preferred measures of core inflation
Compared with June 2019, CPI-Common increased 1.5 per cent, CPI-Median rose 1.9 per cent and CPI-Trim was up 1.8 per cent in Canada. All-items CPI excluding eight of the most volatile components as defined by the Bank of Canada, and excluding the effect of changes in indirect taxes (formerly referred to as CPIX), rose 1.1 per cent, year-over-year
Appendix Tables and Charts
Source: Statistics Canada data portal: Tables 18-10-0004-01 and 18-10-0256-01
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