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August 15, 2023ANALYSIS OF CONSUMER PRICE INDEX FOR JULY 2023 Nova Scotia’s all items Consumer Price Index (CPI) increased 3.4% year-over-year in July 2023. Nova Scotia's inflation has been slowing after peaking at 9.3% in June 2022 but spiked in July 2023 due to base year effects in gasoline prices, as a large monthly drop in July 2022 is no longer included in the 12-month calculations.
Nationally, consumer prices increased 3.3% year-over-year in July 2023, following a 2.8% increase in June. Inflation was highest in Quebec abd Nova Scotia. 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 3.4% year-over-year inflation were: mortgage interest cost, rent, food purchased from restaurants, travel tours, and purchase and leasing of passenger vehicle. These were offset by sizable downward year-over-year contributions from: fuel oil, gasoline, telephone services, internet services, and childcare/housekeeping services.
On a monthly basis, Nova Scotia's all items CPI was up 1.7% from June to July 2023. National prices were up 0.6% with increases in all provinces. Nova Scotia and Prince Edward Island all reported the highest percentage gain (both +1.7%) while Quebec posted the lowest monthly gain.
Statistics Canada noted that Nova Scotia consumers had the fastest rising gas prices in Canada in July with a 14.0% increase from June with contributing factors being the introduction of the federal carbon levy and higher wholesale prices.
Nova Scotia's monthly inflation was influenced by upward contributions from: gasoline, travel tours, fuel oil, traveller accommodation, and inter-city transportation. These upward contributors to Nova Scotia's monthly CPI were offset by some notable downward contributors: personal care supplies and equipment, recreational equipment and services, household textiles, children's clothing, and rent.
Energy prices play a significant role in inflation rates. Nova Scotia's energy prices were down 5.8% from July 2022 to July 2023. Year-over-year energy prices were down 8.2% 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 10.3% from June to July 2023. National energy prices were up 1.7% with gains in seven provinces. Nova Scotia reported the largest monthly increase in energy prices while British Columbia posted the largest monthly decline.
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. Energy prices in Nova Scotia rose in July 2023 with the introduction of federal carbon levy.
Nova Scotia's year-over-year decline in energy prices (-5.8%) was the fifth consecutive decline.
Food price inflation was 8.1% in Nova Scotia (July 2023 vs July2022). National food prices increased 7.8% in July, down from the 8.3% gain reported in June. Food prices were up in all provinces; New Brunswick and Quebec both reported the highest food price inflation while British Columbia reported the least food price growth (though it was still 6.6%).
On a monthly basis, Nova Scotia's food prices were up 0.9% from June to July. National growth in food prices was 0.4% with gains in all provinces.
Food and energy prices are heavily influenced by volatile global commodity markets. Nova Scotia's underlying inflation rate excluding food and energy was 3.9% from July 2022 to July 2023. This was the second fastest among provinces (after Quebec). Nationally, inflation excluding food and energy was 3.4%. Prince Edward Island and 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 0.8% from June to July 2023. Prices for all items excluding food and energy were up 0.5% with gains in all provinces except New Brunswick. The fastest monthly growth was in Prince Edward Island.
Shelter cost inflation increased to 4.0% in Nova Scotia from July 2022 to July 2023, accelerating from 3.0% year-over-year increases reported in June. National shelter prices were up 5.1% with year-over-year gains in all provinces. Alberta reported the largest year-over-year increase in shelter prices while Prince Edward Island reported the smallest.
Monthly shelter costs were up 1.2% in Nova Scotia from June to July 2023. Nationally, shelter costs were up 0.7% from with gains in all provinces.
Among detailed food products with available data, Nova Scotia's year-over-year inflation was fastest for fats and oils while many food products reported year-over-year inflation in excess of 5% in July. All food products reported year-over-year price growth in July.
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 0.6% overall. Prices were down for all components except paper, plastic and aluminium products and cleaning products. Year-over-prices were up most for shelter components.
Overall transportations costs were down 0.1% year-over-year in July owing to the substantial declines in inter-city transportation and gasoline prices.
Health and personal care costs were up 7.4% year-over-year on gains in all sub-components led by non-prescribed medicine.
Clothing and footwear prices were up 0.3% year-over-year with gains in clothing materials and services and men's clothing. Clothing accessories/jewellery, footwear, children's clothing and women's clothing posted year-over-year declines in July.
Nova Scotia's overall prices for recreation, education and reading were up 5.0% from July 2022 to July 2023 with faster increases for other culture and travel services and accommodations. Prices declined in home entertainment equipment and services from the previous year, and were unchanged for recreational equipment and services.
Nova Scotia's prices for alcohol, tobacco and recreational cannabis were up 5.4% year-over-year with the fastest growth in the price for cigarettes.
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 started to come down in 2023.
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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