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July 18, 2023ANALYSIS OF CONSUMER PRICE INDEX FOR JUNE 2023 Nova Scotia’s all items Consumer Price Index (CPI) increased 1.9% year-over-year in June 2023. This was the lowest year-over-year inflation rate reported for Nova Scotia since February of 2021. Nova Scotia's inflation has been slowing after peaking at 9.3% in June 2022. Nationally, consumer prices increased 2.8% year-over-year in June 2023, following a 3.4% increase in May. Inflation was highest in Quebec and British Columbia. Prince Edward Island reported the slowest inflation.
The most significant upward contributors (combining price increase as well as share of the consumption basket) to Nova Scotia's 1.9% year-over-year inflation were: rent, mortgage interest cost, food purchased from restaurants, personal care supplies and equipment, and purchase and leasing of passanger vehicle. These were offset by sizable downward year-over-year contributions from: gasoline, fuel oil, telephone services, internet services, and childcare/housekeeping services.
On a monthly basis, Nova Scotia's all items CPI was up 0.4% from May to June 2023. National prices were up 0.1% with increases in seven provinces. Nova Scotia, Quebec and British Columbia all reported the highest percentage gain (all +0.4%) while Manitoba posted the largest monthly decline.
Nova Scotia's monthly inflation was influenced by upward contributions from: traveller accommodation, rent, personal care supplies and equipment, inter-city transportation, gasoline, and traveller accommodation. These upward contributors to Nova Scotia's monthly CPI were offset by some notable downward contributors: telephone services, travel tours, women's clothing, men's clothing, and dairy products.
Energy prices play a significant role in inflation rates. Nova Scotia's energy prices were down 20.0% from June 2022 to June 2023. Year-over-year energy prices were down 14.6% nationally with declines in all provinces. Prince Edward Island reported the largest drop in year-over-year energy prices.
On a monthly basis, Nova Scotia's energy prices increased 0.6% from May to June 2023. National energy prices were up 1.4% with gains in all provinces except Manitoba. British Columbia reported the largest monthly increase 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 March 2022. Nova Scotia energy prices peaked in June 2022 and have since been trending down, though there was a substantial increase in October and November 2022.
Nova Scotia's year-over-year decline in energy prices (-20.0%) was the fourth consecutive decline.
Food price inflation was 8.5% in Nova Scotia (June 2023 vs June 2022), down from the 9.0% year-over-year pace of inflation reported in May 2023. National food prices increased 8.3% in June, unchanged from the growth recorded in the previous month. Food prices were up in all provinces; New Brunswick and Quebec both reported the highest food price inflation while Ontario reported the least food price growth (though it was still 7.7%).
On a monthly basis, Nova Scotia's food prices were down 0.2% from May to June. National growth in food prices was 0.1% with gains in four provinces.
Food and energy prices are heavily influenced by volatile global commodity markets. Nova Scotia's underlying inflation rate excluding food and energy was 4.1% from June 2022 to June 2023. This was the secons fastest among provinces (after Quebec). Nationally, inflation excluding food and energy was 3.5%. Prince Edward Island 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 0.6% from May to June 2023. Prices for all items excluding food and energy were unchanged nationally. The fastest monthly growth was in Nova Scotia while Prince Edward Island and Manitoba both posted largest monthly declines in June 2023.
Shelter cost inflation increased to 3.0% in Nova Scotia from June 2022 to June 2023, accelerating from 1.5% year-over-year increases reported in May. National shelter prices were up 4.8% with year-over-year gains in all provinces except Prince Edward Island. Saskatchewan reported the largest year-over-year increase in shelter prices.
Monthly shelter costs were up 0.8% in Nova Scotia from May to June 2023. Nationally, shelter costs were up 0.5% from with gains in all provinces except Prince Edward Island and New Brunswick.
Among detailed food products with available data, Nova Scotia's year-over-year inflation was fastest for chicken while many food products reported year-over-year inflation in excess of 10% in June. All food products reported year-over-year price growth in June.
In detailed shelter cost components, home and mortgage insurance reported the fastest year-over-year price increases while fuel oil prices posted the largest decline.
Household operations/furnishings costs were down 0.3% overall. Prices were down for utensils/tableware/cookware, appliances, textiles, furniture, financial services, child care and housekeeping, internet access, and telephones. Year-over-prices were up most for shelter components.
Overall transportations costs were down 6.8% year-over-year in June owing to the substantial declines in gasoline from June 2022 to June 2023.
Health and personal care costs were up 9.4% year-over-year on gains in all sub-components led by personal care supplies.
Clothing and footwear prices were up 0.5% year-over-year with faster gains in children's and men's clothing. Clothing accessories/jewellery, footwear and women's clothing posted year-over-year declines in June.
Nova Scotia's overall prices for recreation, education and reading were up 2.5% from June 2022 to June 2023 with faster increases for other culture and recreation offset by falling prices for home entertainment equipment/services and purchases and operations of recreational vehicles.
Nova Scotia's prices for alcohol, tobacco and recreational cannabis were up 5.5% 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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