B.C. consumer price inflation inched up in April to a year-over-year pace of 1.5%, marking a sharp departure from a near-zero trend over the past 12 months.
While a recent firming in price levels, particularly for gasoline, contributed to the gain, the shift was largely technical.
The low inflation rate we have been accustomed to over the past year has generally reflected the move from the HST back to the PST, which lowered after-tax prices for a number of goods and services, notably restaurant meals and some professional services. April's reading is the first apples-to-apples comparison of price levels since the shift.
Nonetheless, at 1.5% B.C. inflation is still modest and below the national reading of 2%, indicating subdued economic growth, weak labour markets and retail competition.
Price inflation was modest for most products in April, but – no surprise to motorists – gasoline was an exception.
Gas prices rose nearly 6% from a year ago. While some of this gain reflects a sharp April decline last year, prices at the pump have trended higher since late 2013. Even adjusting for normal seasonal variation, gas prices are up about 4% since November.
In addition, natural gas prices were 12% higher than a year ago. Excluding energy, consumer price inflation was about 1.1%
Other CPI components showing stronger than headline growth included tobacco products and food. In contrast, prices were lower for clothing and health and personal care products.
CPI inflation is forecast to average 1.2% this year, led by higher gas prices and a modest pickup in general prices, with 2015 inflation expected to reach 2%.
Inflation will be lifted by modest improvements in the economy and labour markets, as well as a flow-through of higher import prices due to the lower Canadian dollar. •
