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November 21, 2023ANALYSIS OF CONSUMER PRICE INDEX FOR OCTOBER 2023 Nova Scotia’s all items Consumer Price Index (CPI) increased 3.2% year-over-year in October 2023, down from a pace of 4.8% year-over-year in September. October all items CPI was down 0.3% compared the previous month.
Nova Scotia's inflation had been slowing after peaking at 9.3% in June 2022. Inflation started to accelerate again in July 2023, particularly due to gasoline prices, as the large monthly drop in July 2022 is no longer included in 12-month calculations while Federal carbon charges came into effect over the summer. However, in October 2022 there was an increase in global oil prices as a result of OPEC production cuts, which drove up fuel prices in the fall of last year. As global oil prices have since retreated, energy prices in October 2023 were down on a year-over-year basis.
Nationally, consumer prices increased 3.1% year-over-year in October 2023, following a 3.8% year-over-year increase in September. Inflation was highest in Québec. Prince Edward Island, Manitoba and Saskatchewan reported the slowest inflation.
The most significant upward contributors (combining price increase as well as share of the consumption basket) to Nova Scotia's 3.2% year-over-year inflation were: rent, mortgage interest cost, food purchased from restaurants, travel tours and electricity. These were offset by downward year-over-year contributions from: fuel oil, telephone services, inter-city transportation, recreation equipment/services and furniture.
On a monthly basis, Nova Scotia's all items CPI was down 0.3% from September to October 2023. National prices were up 0.1% with decreases in seven provinces. Ontario and Manitoba reported the highest percentage gains while Alberta, Saskatchewan and Newfoundland and Labrador posted the largest monthly declines.
Nova Scotia's monthly inflation was influenced by upward contributions from: rent, travel tours, property taxes (and other special charges), food purchased from restaurants and mortgage interest cost. These upward contributors to Nova Scotia's monthly CPI were offset by some notable downward contributors: gasoline, traveller accommodation, furniture, recreational equipment/services and fresh vegetables.
Energy prices play a significant role in inflation rates. Nova Scotia's energy prices were down 1.5% from October 2022 to October 2023. Year-over-year energy prices were down 5.4% nationally with decreases in all provinces. Manitoba and British Columbia reported the largest decreases while Nova Scotia, New Brunswick and Québec reported the smallest declines.
On a monthly basis, Nova Scotia's energy prices decreased 4.8% from September to October 2023. National energy prices were down 4.6% with declines in all provinces. Alberta reported the largest monthly decrease in energy prices while Manitoba posted the smallest 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 then trended down before rising substantially in October and November 2022 as the Organization of Petroleum Exporting Countries cut production to raise global oil prices. Energy prices in Nova Scotia rose again in July 2023 with the introduction of the federal carbon levy.
Nova Scotia's year-over-year price decline for fuel oil (-8.7%) was more substantial than that for gasoline (-0.4%).
Food price inflation was 6.3% in Nova Scotia (October 2023 vs October 2022). National food prices increased 5.6% in October. Food prices were up in all provinces; Atlantic Canada reported the highest food price inflation while Manitoba reported the least food price growth (though it was still 4.5%).
On a monthly basis, Nova Scotia's food prices were down 0.3% from September to October. National food prices were down 0.1% with declines in eight provinces. New Brunswick reported the largest decrease, while Newfoundland and Labrador and Québec each reported a small increase.
Food and energy prices are heavily influenced by volatile global commodity markets. Nova Scotia's underlying inflation rate excluding food and energy was 3.3% from October 2022 to October 2023. Nationally, inflation excluding food and energy was 3.4%. Quebec reported the fastest growth while Prince Edward Island and Saskatchewan 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 +0.3% from September to October 2023. Nationally, prices for all items excluding food and energy were up 0.5% with only one province reporting a decline (Manitoba). Ontario reported the largest monthly increase.
Shelter cost inflation slowed to 6.0% in Nova Scotia from October 2022 to October 2023, from a 6.8% year-over-year increase reported in September. National shelter prices were up 6.1% with 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 1.4% in Nova Scotia from September to October 2023 - the largest monthly gain among provinces. Nationally, shelter costs were up 0.9% with gains in all provinces except Alberta and Newfoundland and Labrador.
Among detailed food products with available data, Nova Scotia's year-over-year inflation was fastest for fats/oils and preserved fruit. Many food products continued to report year-over-year inflation in excess of 5% in October. Lower year-over-year prices were reported only for pork.
In detailed shelter cost components, rent reported the fastest year-over-year price increases, followed by home and mortgage insurance. Home maintenance and repairs, homeowners' replacement cost and fuel oil reported declines.
Household operations/furnishings costs were down 2.9% overall. Prices were down for all components except cleaning products. The largest declines were in utensils/tableware/cookware, child care/housekeeping and telephones.
Overall transportations costs were up 0.6% year-over-year in October. Inter-city transportation had the largest decline while taxi/other local transportation had the largest increase.
Health and personal care costs were up 6.9% year-over-year on gains in all sub-components led by personal care supplies.
Clothing and footwear prices were down 1.7% year-over-year in October with declines in most categories (except women's clothing and clothing materials/services). Children’s clothing posted the largest year-over-year decline in October.
Nova Scotia's overall prices for recreation, education and reading were up 4.5% from October 2022 to October 2023, with faster increases for travel services/accommodations. Prices declined from the previous year for recreational equipment/services (excluding RVs).
Nova Scotia's prices for alcohol, tobacco and recreational cannabis were up 4.1% year-over-year with the fastest growth in cigarette prices.
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 is starting to fade 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%.
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 October 2023 slowed for CPI-common (+4.2%), CPI-median (3.6%), CPI-trim (3.5%) and CPI-core (2.7%).
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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