Inflation drops to 2.3% in New Brunswick

Article content

Annual inflation has hit 2.3 per cent in New Brunswick, lower than the national average of 2.9 per cent, a sign that the steep rise in goods over the last few years is finally cooling off.

The latest consumer price index published by Statistics Canada on Tuesday is from the month of January and calculated on a year-over-year basis.

The national statistical agency said consumers mostly saw relief at the pumps, as gasoline prices across Canada over the last year declined by four per cent in January.

Excluding gasoline, most major items slowed to 3.2 per cent year-over-year in January, down from the 3.5 per cent growth in December.

Food bought at stores increased in price by 3.4 per cent, way down from the double-digit figures that have pushed thousands of more families to food banks over the last couple of years.

Shelter, however, remains a major area of concern, having increased year-over-year by a punishing 6.2 per cent.

The new number will renew calls for governments to introduce stiffer measures to end the housing affordability crisis.

This increase is due to mortgage interest costs, for which the central bank is responsible, and to the rise in rental prices attributable to the dizzying increase in population.

Matthieu Arseneau and Alexandra Ducharme

Abby Xu, an economist at Royal Bank of Canada, said she expected shelter inflation to remain “sticky” as homeowners renew mortgages at higher interest rates and rents stay high due to Canada’s housing supply shortage.

With shelter costs, up 6.2 per cent annually, now the primary driver for inflation, it’s obvious that higher interest rates have slowed the Canadian economy, said National Bank of Canada economists Matthieu Arseneau and Alexandra Ducharme.

“This increase is due to mortgage interest costs, for which the central bank is responsible, and to the rise in rental prices attributable to the dizzying increase in population,” they said in a note after the data came out.

But it is also the first time since June that inflation has been within the Bank of Canada’s target rate of between one and three per cent. Analysts don’t think the bank will change its key interest rate next month – the lower inflation couldn’t be considered a trend yet – but if price increases continue to cool down, it’s possible the governor, Tiff Macklem, will finally deliver an interest cut by the summer, they say.

“January’s inflation print was a big positive shift in the right direction, but the Bank of Canada will need to see this trend continue before it will be comfortable pivoting to rate cuts,” said Olivia Cross, North America economist at Capital Economics, in a note. “After all, we saw headline inflation fall below three per cent in June, but this was followed by a series of sticker inflation prints.”

While grocery prices remained high, their growth slowed year over year in January (+3.4 per cent) compared with December (+4.7 per cent).

The slower price hikes in grocery stores were broad-based, with products such as meat (+2.8 per cent), dairy products (+1.5 per cent), bakery products (four per cent) and fresh fruit (+1.9 per cent) contributing to the slower year-over-year price growth in January.

The good news for consumers is other food items had year-over-year price declines, such as soup (-2.1 per cent) and shrimps and prawns (-3.4 per cent). Bacon lovers in particular will be happy, as the fatty and salty meat dropped in price by 8.4 per cent.

Prices were also down for airfare (-14.3 per cent) and cell service (-16.4 per cent).

– with files from the Financial Post