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April 18, 2023ANALYSIS OF CONSUMER PRICE INDEX FOR MARCH 2023 Nova Scotia’s all items Consumer Price Index (CPI) increased 4.6% year-over-year in March 2023. This was the lowest year-over-year inflation rate reported for Nova Scotia since July of 2021. Nova Scotia's inflation has been slowing after peaking at 9.3% in June 2022. Nationally, consumer prices increased 4.3% year-over-year in March 2023, decelerating from a 5.2% increase in February. Inflation was highest in Manitoba and lowest in Alberta as well as Newfoundland and Labrador.
The most significant upward contributors (combining price increase as well as share of the consumption basket) to Nova Scotia's 4.6% year-over-year inflation were: rent, mortgage interest cost, purchase/leasing of passenger vehicles, food purchased from restaurants and homeowners maintenance/repairs. These were offset by sizable downward year-over-year contributions from: gasoline, fuel oil, home entertainment parts/equipment/services, childcare/houskeeping services and internet services.
On a monthly basis, Nova Scotia's all items CPI was unchanged from February to March 2023. National prices were up 0.5% with Alberta reporting the fastest monthly inflation. Newfoundland and Labrador and Prince Edward Island were the only provinces to report monthly price declines from February to March.
Nova Scotia's monthly inflation was influenced by upward contributions from: purchase/leasing of passenger vehicles, travel tours, traveller accommodations, cereal products and mortgage interest costs. These upward contributors to Nova Scotia's monthly CPI were offset by some notable downward contributors: fuel oil, gasoline, furniture, rent and telephone services.
Energy prices play a significant role in inflation rates. Nova Scotia's energy prices were down 7.9% from March 2022 to March 2023. Year-over-year energy prices were down 6.9% nationally with declines in all provinces. Alberta reported the largest drop in year-over-year energy prices while Saskatchewan had the least decline.
On a monthly basis, Nova Scotia's energy prices fell 4.6% from February to March 2023. National energy prices were up 0.7% from February to March with gains in four provinces, led by Alberta. Prince Edward Island reported the largest monthly decline in energy prices.
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 February 2022. Nova Scotia energy prices peaked in May 2022 and have since been trending down, though there was a substantial increase in October and November.
Nova Scotia's year-over-year decline in energy prices (-7.9%) was the first such decline since January of 2021.
Food price inflation was 9.6% in Nova Scotia (March 2023 vs March 2022), unchanged from the year-over-year pace of inflation reported in February 2023. National food prices decelerated to 8.9% growth. Food prices were up in all provinces; Quebec reported the highest food price inflation while British Columbia reported the least food price growth (though it was still 7.8%).
On a monthly basis, Nova Scotia's food prices were up 1.0% from February to March, outpacing all other provinces. National growth in food prices was 0.2% from February to March. Only British Columbnia reported a decline in food prices from February to March (Alberta's food prices were stable).
Food and energy prices are heavily influenced by volatile global commodity markets. Nova Scotia's underlying inflation rate excluding food and energy was 5.5% from March 2022 to March 2023. This was tied with Manitoba for the fastest among provinces. Nationally, inflation excluding food and energy was 4.5%. Newfoundland and Labrador 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 0.4% from February to March 2023, slower than the national average of 0.6%. Prices for all items excluding food and energy were up in all provinces with the fastest monthly growth in Ontario and Alberta. Prince Edward Island reported the slowest monthly growth in inflation excluding energy and food.
Shelter cost inflation slowed to 5.5% in Nova Scotia from March 2022 to March 2023, decelerating considerably from 9.7% year-over-year price increases reported in February. National shelter prices were up 5.4% with year-over-year gains in all provinces led by Manitoba and Saskatchewan. Newfoundland and Labrador reported the slowest year-over-year increase in shelter prices.
Monthly shelter costs were down 1.6% in Nova Scotia from February to March 2023. All Atlantic provinces reported lower monthly shelter costs on a monthly basis. Nationally, shelter costs were up 0.4% from February to March with gains in all central and western provinces (led by Alberta).
Among detailed food products with available data, Nova Scotia's year-over-year inflation was fastest for fats and oils and many food products reported year-over-year inflation in excess of 10% in March. Only fresh pork reported a year-over-year price decline in March.
In detailed shelter cost components, rent and home maintenance reported the fastest year-over-year price increases while fuel oil prices were down and electricity prices were stable.
Household operations/furnishings costs were up 3.3% overall. Prices were down for childcare/housekeeping, internet access, financial services and furniture. Year-over-prices were up most for utensils, tableware and cookware as well as paper/plastic/aluminium foil products, household textiles, household equipment and cleaning products.
Overall transportations costs were down slightly (-0.1%) year-over-year in March owing to the substantial drop in gasoline prices from March 2022 to March 2023.
Health and personal care costs were up 6.0% year-over-year despite a decline in prices for prescribed medicines.
Clothing and footwear prices were up 6.2% year-over-year with faster gains in men's clothing and clothing accessories/jewellry prices offsetting a fall in children's clothing prices.
Nova Scotia's overall prices for recreation, education and reading were up 2.4% from March 2022 to March 2023 with faster increasese for travel services and reading, offset by falling prices for home entertainment equipment/services.
Nova Scotia's prices for alcohol, tobacco and recreational cannabis were up 6.5% year-over-year with the fastest growth in price for liquor purchased from stores.
Trends
Since the start of the Bank of Canada's inflation-targeting monetary policy regime, inflation for all items has periodically risen above a 4% year-over-year pace. This is typically followed by periods of slow price growth or even negative price changes. The most recent acceleration in inflation was the strongest since the inflation-targeting era began.
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 in 2021 and 2022 spread beyond commodity prices and has only recently started to edge down at the national level.
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 in recent months.
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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