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August 19, 2020ANALYSIS OF NOVA SCOTIA'S CONSUMER PRICE INDEX FOR JULY 2020 TRENDS - JULY 2020
In Nova Scotia, the year-over-year the All-Items Consumer Price Index (CPI) decreased 0.5 per cent in July 2020. The national CPI increased 0.1 per cent year-over-year.
Monthly consumer prices increased 0.1 per cent in Nova Scotia and were unchanged (0.0%) nationally.
National year-over-year CPI growth was lower in July (0.1%) than the 0.7 per cent increase in June. CPI growth was slower than last month with broad-based slowdown in both goods and services. Prices were up in five of the eight major CPI components.
Prices for air transportation fell year-over-year for the first time since December 2015 as various incentives were offered to encourage people to travel. Many flights remain cancelled as result of COVID-19. Prices for traveller accommodations were down 27.0 per cent year-over-year.
Gasoline prices were down year-over-year for the fifth consecutive month.
Meat prices were rising at a slower year-over-year pace in July than June as fresh or frozen beef prices were lower (-6.7%) compared to last month as production gradually returns to pre-COVID-19 levels. Pork prices fell compared to June as production recovered and chicken price rose in July on strong demand and a large price decline the previous month.
Impact of COVID-19 on the Consumer Price Index
Statistics Canada continued special CPI program measures for July 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. Additional details can be found in the technical supplement.
Three provinces reported declines in year-over-year inflation: Prince Edward Island (-0.9%), Nova Scotia (-0.5%), and New Brunswick (-0.4%). The global decline in crude oil prices has resulted in lower prices for fuel oil and other fuels (-20.6%). Furnace fuel oil is more commonly used in the Atlantic provinces than in the rest of the country. Because fuel oil has a higher weight in the Nova Scotia CPI basket, the province’s rate of inflation is more sensitive to fluctuations in global oil prices. Global oil prices remain low compared to July 2019. The highest inflation rate was in Alberta (+0.9%).
The main contributors to the monthly (July 2020 vs. June 2020) NS CPI movement were:
- Gasoline (+6.9%)
- Passenger vehicles insurance premiums (+5.7%)
- Fuel oil and other fuels (+7.4%)
- Purchase and leasing of passenger vehicles (-1.1%)
- Rent (-1.6%)
- Women's clothing (-2.9%)
Contributors to the annual (July 2020 vs. July 2019) NS CPI movement were:
- Purchase and leasing of passenger vehicles (+3.2%)
- Passenger vehicles insurance premiums (+9.8%)
- Cigarettes (+6.7%)
- Gasoline (-19.7%)
- Fuel oil and other fuels (-25.9%)
- Traveller accommodations (-31.3%)
Nova Scotia's consumer price inflation (year-over-year growth in CPI) excluding food and energy was 0.6 per cent in July, compared to a national rate of 0.5 per cent. New Brunswick and Manitoba (+0.9%) reported the largest price level increases and British Columbia (+0.2%) reported the smallest.
In June 2020, the CPI for food in Nova Scotia increased 2.3 per cent year-over-year. Compared to the previous month, food prices were up 0.1 per cent. Annual food prices increased in all provinces with Prince Edward Island (+4.1%) leading the price growth compared to a national average of 2.2 per cent.
The Nova Scotia energy price index decreased by 14.2 per cent compared to a year ago in July. Year-over-year energy price indexes decreased in every province. The largest annual decline was in Prince Edward Island (-16.8%) and Alberta (-0.6%) had the smallest decline. Monthly energy prices (July 2020 vs. June 2020) were up 4.2 per cent in Nova Scotia and 2.4 per cent nationally. All provinces experienced positive monthly energy price growth in July with the largest increase in Prince Edward Island (5.5%).
Year-over-year, the consumer price index for shelter decreased 0.5 per cent in Nova Scotia and increased 1.5 per cent in Canada. Prince Edward Island (-1.8%) reported the largest decrease in the shelter price index and Alberta (+2.7%) reported the largest increase.
Nova Scotia's consumer price inflation (year-over-year growth in CPI) excluding energy was up 0.9 per cent in July, compared to a national rate of 0.8 per cent. CPI excluding energy index were similar across all provinces in July, all within range of 0.6 per cent to 1.3 per cent.
Major Components for July 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 July 2020, the All-Items CPI year-over-year inflation rate for Nova Scotia was -0.5 per cent, below Canada's at 0.1 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 2009.
Annual inflation for the CPI excluding food and energy in Nova Scotia (0.6%) was higher than the national rate (0.5%) in July 2020.
Bank of Canada's preferred measures of core inflation
Compared with July 2019, CPI-Common increased 1.3 per cent, CPI-Median rose 1.9 per cent and CPI-Trim was up 1.7 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 0.7 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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