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May 19, 2021ANALYSIS OF NOVA SCOTIA'S CONSUMER PRICE INDEX FOR APRIL 2021 TRENDS – April 2021
Nova Scotia’s All-Items Consumer Price Index (CPI) increased 4.2% year-over-year in April 2021. Nationally, consumer prices were up 3.4% from a year earlier, following a 2.2% gain in March.
Statistics Canada noted that the year-over-year increase recorded in April was mostly due to a steep decline in prices seen in April 2020. The COVID-19 pandemic had largely impacted global economic conditions and purchasing patterns in spring 2020 which resulted in large price declines from February to April 2020. However, when a large downward price change in the base month is removed from the 12-month price movement, it has an upward effect on the headline CPI in the current month.
The price declines registered at the beginning of the pandemic, led by energy products, had an upward impact on the year-over-year inflation rate in April 2021 due to the use of significantly lower prices from April 2020 as the basis for year-over-year calculation. Statistics Canada notes that the upward impact of base-year effects will be temporary but will be affecting inflation statistics in coming months.
Compared to March 2021, monthly consumer prices increased 0.4% in Nova Scotia and 0.5% in Canada.
Impact of COVID-19 on the Consumer Price Index
Statistics Canada continued special CPI program measures for April 2021. Due to COVID-19 impact on product availability, select sub-components of the CPI received temporary special imputations. The sub-indexes for travel tours, some components of spectator entertainment, recreational services, personal care services in some areas, and some components of use of recreational facilities and services in some areas were imputed from the monthly change in the all-items index - effectively removing the impact of these goods and services on the CPI. The price indexes for beer, wine and liquor served in licensed establishments were imputed in several regions, using the indexes to which consumers likely redirected their expenditures: beer, wine and liquor purchased from stores. Consistent with previous months affected by the COVID-19 pandemic, prices for suspended flights are excluded from the April CPI calculation because passengers were ultimately unable to consume them. As a result, selected sub-components of the air transportation index were imputed from the parent index (air transportation).
Prices increased year-over-year in all provinces led by Prince Edward Island (+5.3%). British Columbia had the slowest growth (+3.0%).
Atlantic provinces posted higher year-over-year price increases as a result of fuel being used more commonly for home heating in the region. The price of fuel oil and other fuels are subject to changes in oil prices with prices remaining higher when compared to April 2020.
The main contributors to the monthly change (April 2021 vs March 2021) in Nova Scotia CPI were:
- Telephone services (+4.9%)
- Passenger vehicle insurance premiums (+2.0%)
- Homeowners’ replacement cost (+1.3%)
- Fresh vegetables (-7.9%)
- Rent (-0.6%)
- Purchase and operations of recreational vehicles (-2.9%)
The main contributors to the yearly change (April 2021 vs April 2020) in Nova Scotia CPI were:
- Gasoline (+83.1%)
- Fuel oil and other fuels (+26.7%)
- Homeowners’ replacement cost (+12.0%)
- Telephone services (-14.5%)
- Mortgage interest cost
- Traveller accommodation (-10.3%)
Nova Scotia’s consumer price inflation (year-over-year) excluding food and energy increased 2.3% in April. Consumer prices excluding food and energy were up in all provinces led by Prince Edward Island (+2.6%) and Quebec (+2.5%). Alberta had the lowest increase at 0.8%.
The CPI for food in Nova Scotia declined 0.2% year-over-year in April. Nationally, food prices were up 0.9% from a year earlier. All provinces except Nova Scotia recorded year-over-year increase in food prices.
Compared to the previous month, food prices declined in eight provinces. Food prices were down 0.6% in Nova Scotia and 0.1% nationally.
Nova Scotia energy prices increased 34.0% year-over-year in April compared to the national average of 32.7%. All provinces reported double digit increases in energy prices.
Gasoline prices increased 62.5% year-over-year in April posting the largest year-over-year increase on record. April’s increase was mainly driven by the 15.2% decline in gasoline prices in April 2020 because of limited travel, temporary business closures, and lower levels of international trade.
The year-over-year change in Nova Scotia’s CPI is more exposed to the effects of changes in oil prices on inflation due to a larger use of fuel as a source of home heating compared to other provinces.
Year-over-year, shelter costs in Nova Scotia increased 4.4% in April, above the national average increase of 3.2%. Compared to April 2020, shelter prices were up in all provinces with the largest increase in Prince Edward Island (+7.8%) and the smallest increase in Saskatchewan (+0.8%).
Statistics Canada noted that the building materials and demand for single-family homes continues to grow, pushing up the homeowners replacement cost index (around 5% of the CPI basket weight). Nationally, the homeowners replacement costs increased 9.1% and in Nova Scotia was up 12.0% year-over-year. This is partially offset by the decline in mortgage interest cost index over the past year.
Nova Scotia's consumer price inflation (year-over-year growth in CPI) excluding energy was 1.8% in April compared to a national rate of 1.6%. Prince Edward Island (+2.3%) posted the largest year-over-year gain while the CPI excluding energy had the smallest change in Alberta (+0.9%).
Major Components for April 2021
The following table shows the price increases specific to Nova Scotia for the major components of the CPI this month:
Long Run Trends
In April 2021, the All-Items CPI year-over-year inflation rate for Nova Scotia was 4.2%, above Canada's average rate at 3.4%. 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.
Bank of Canada's preferred measures of core inflation
Compared to April 2020, CPI-Common increased 1.7%, while CPI-Median and CPI-Trim were both up 2.3% 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 2.3% year-over-year. All the indexes year-over-year change were higher in April 2021 than last month.
Appendix Tables and Charts
Source: Statistics Canada data portal: Tables 18-10-0004-01 and 18-10-0256-01
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