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June 25, 2024ANALYSIS OF CONSUMER PRICE INDEX FOR MAY 2024 Nova Scotia’s all items Consumer Price Index (CPI) rose to 3.7% year-over-year in May 2024, up from 3.1% year-over-year in April. This was the fastest year-over-year pace of price growth across provinces.
Nova Scotia's inflation has been slowing after peaking at 9.3% in June 2022, though there have been periods of rising inflation, particularly on higher energy prices.
Nationally, consumer prices increased 2.9% year-over-year in May 2024, up from 2.7% in April. Inflation was highest in Nova Scotia and slowest in Manitoba.
The most significant upward contributors (combining price increase as well as share of the consumption basket) to Nova Scotia's 3.7% year-over-year inflation were: gasoline, mortgage interest cost, rent, fuel oil and food purchased from restaurants.
The largest downward year-over-year contributions were from: telephone services, traveller accommodation, men's and women’s clothing, and recreational equipment and services (excluding RVs).
On a monthly basis, Nova Scotia's all items CPI was up 0.2% from April to May 2024. National prices were up 0.6% with increases reported for all provinces except New Brunswick. Québec reported the fastest percentage growth on a monthly basis.
Major upward contributors to Nova Scotia's monthly consumer prices were: gasoline, recreational equipment and services (excluding RVs), travel tours, traveller accommodation, and financial services. The main downward contributions were from: rent, fuel oil, women’s clothing, food purchased from restaurants, and household textiles.
Energy prices play a significant role in inflation rates. Nova Scotia's energy prices were up 15.0% from May 2023 to May 2024. Year-over-year energy prices were up 4.1% nationally with eight provinces reporting higher energy prices. Nova Scotia reported the fastest year-over-year growth in energy prices while Manitoba reported the largest decline.
On a monthly basis, Nova Scotia's energy prices declined 0.2% from April to May 2024. National energy prices were down 1.1% with all provinces reporting lower prices except Manitoba compared to the previous month. Alberta reported the largest monthly decline in energy prices.
Nova Scotia's energy prices (and overall inflation) are more sensitive to fluctuations in the global price of crude oil. In May 2024, gasoline prices increased 18.7% compared to a year ago in Nova Scotia. Eight provinces reported higher gasoline prices, with the fastest growth in Nova Scotia. Manitoba reported the steepest drop in gasoline prices. Gasoline prices increased 1.2% from April to May in Nova Scotia (-1.3% nationally). Eight provinces reported monthly gasoline price declines with the largest decline in New Brunswick. The largest gain was reported in Prince Edward Island.
Nova Scotia's year-over-year inflation for fuel oil was 19.3%, the second fastest growth among provinces. Nationally, the fuel oil and other fuels index increased 10.1% compared to May 2023. On a monthly basis, Nova Scotia's fuel oil prices were down 4.9%. National fuel oil prices were down 4.1% from April to May.
Food price inflation was 2.9% in Nova Scotia (May 2024 vs May 2023). National food prices increased 2.4% in May. Food prices were up in all provinces. Prince Edward Island reported the highest food price inflation while Ontario reported the slowest food price growth.
On a monthly basis, Nova Scotia's food prices increased 0.8% from April to May. National food prices rose 0.9% with all provinces reporting higher prices on a monthly basis. The fastest growth was in Manitoba while Alberta and Prince Edward Island reported the slowest monthly growth.
Food and energy prices are heavily influenced by volatile global commodity markets. Nova Scotia's underlying inflation rate excluding food and energy was 2.6% from May 2023 to May 2024. Nationally, inflation excluding food and energy was 2.9%. Québec, Ontario, and Alberta reported the fastest growth while Newfoundland and Labrador reported the slowest growth in inflation excluding food and energy prices.
On a monthly basis, Nova Scotia's prices for all items excluding food and energy were up 0.2% from April to May 2024. Nationally, prices for all items excluding food and energy were up 0.6% with increases in all provinces. Québec and Ontario reported the fastest monthly increases while New Brunswick reported the slowest growth.
Year-over-year shelter cost inflation was 6.4% in Nova Scotia in May 2024, below the 6.8% shelter inflation reported in April. National shelter prices were up 6.4% with increases in all provinces. Alberta reported the largest year-over-year increase in shelter prices while Saskatchewan reported the slowest increase.
Monthly shelter costs were down 0.7% in Nova Scotia from April to May 2024. Nationally, shelter costs were up 0.4% with increases in four provinces. Ontario reported the fastest monthly growth in shelter prices and Nova Scotia reported the largest decline. Shelter costs were unchanged in Saskatchewan and Alberta.
Among detailed food products with available data, Nova Scotia's year-over-year inflation was fastest for preserved fruit as well as fats and oils. The largest year-over-year price decline was for fish/seafood.
In detailed shelter cost components, fuel oil reported the fastest year-over-year price increase, followed by home and mortgage insurance. Homeowners replacement cost reported the only year-over-year decline.
Household operations/furnishings costs were up 0.4% overall. The largest increases were in internet access services. Prices fell for telephones, paper/plastic/aluminium products as well as for textiles and utensils/tableware/cookware.
Clothing and footwear prices were down 4.9% year-over-year in May with declines in all sub-components except clothing accessories and jewellery and clothing materials and services.
Health and personal care costs were up 4.1% year-over-year on gains in all sub-components led by personal care services.
Overall transportations costs were up 6.4% year-over-year in May. City busses had the only decline while gasoline had the largest increase.
Nova Scotia's overall prices for recreation, education and reading were up 1.7% from May 2023 to May 2024, with faster increases for purchase/operation of recreational vehicles. Prices declined the fastest for home entertainment equipment/services compared to May 2023.
Nova Scotia's prices for alcohol, tobacco and recreational cannabis were up 3.9% year-over-year with growth in all categories. Alcohol from licensed establishments had the largest increase, followed by cigarettes.
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 has faded 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%. In the last five months, Nova Scotia's inflation excluding food and energy has slowed to less than 3% year-over-year.
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 May 2024 were up for all core measures (except CPI-common): CPI-common (2.4%), CPI-median (2.8%), CPI-trim (2.9%), CPI-core (1.8%).
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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