As Canada’s inflation rate dropped further than analysts predicted last month, growth in prices jumped in Alberta, leading all Canadian provinces.
According to Statistics Canada’s latest consumer price index, the national inflation rate cooled to 2.8 per cent in January, while Alberta’s rate of inflation rose to 3.4 per cent.
The report said the increase in Alberta’s January inflation rate was partly due to a 119.9-per cent jump in electricity prices compared with January 2023.
Charles St-Arnaud, chief economist with Alberta Central, said the doubling of electricity prices in the data is because of a “base effect” following a government-imposed cap on electricity rates last year.
“In January last year, we had the rebate on electricity that was put in place by the government that drove electricity prices down,” St-Arnaud told Global News. “We don’t have that decline this year.”
Higher utility costs also played a factor in Calgary’s inflation rate rising to 4.1 per cent in January, which is the highest among major Canadian cities.
According to the City of Calgary’s analysis of the January inflation numbers, “unprecedentedly high” rental prices have also played a part in the city’s growth in inflation.
Statistics Canada said shelter costs rose 12.2 per cent over January 2023, with rented accommodation costs increasing 14.4 per cent and owned accommodation rising 9.5 per cent.
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“You have this sort of perfect storm of upward pressure,” Calgary Chamber of Commerce CEO Deborah Yedlin told Global News.
Yedlin said an influx of more than 180,000 people moving to Alberta over the last 12 months, with many settling in Calgary, is putting pressure on housing costs and to get more supply built.
However, Yedlin believes there will be “moderation” heading into 2024 after a year of concern over inflationary impacts.
“Our labour pool is going to expand, and that should sort of dampen the upward pressure on wages,” Yedlin said. “There has been a supply response in terms of construction of new housing, and there’ll be new buildings coming online and that should also help moderate the pressure on housing costs.”
The City of Calgary’s report suggests new policies will start to impact inflation in Alberta, like the province reinstating the tax on gasoline, which was previously suspended due to high energy costs.
“This has prompted a surge in gasoline prices in Alberta by 1.6 per cent compared to December 2023, despite a 3.3-per cent (year-over-year) decrease,” the report said.
“Alberta experienced the highest month-over-month gasoline price hike in Canada, in contrast to Manitoba, which saw the lowest (month-over-month) price changes of minus 14.1 per cent in gasoline after eliminating its fuel tax starting in 2024.”
The report also suggests the increases to the carbon tax and the upcoming federal alcohol tax in April will also “further impact the costs of living throughout 2024.”
Nathan Neudorf, Alberta’s affordability and utilities minister, said the province expects inflation to slow this year despite the increased rate in January.
“We are working to provide stronger price protections to help Albertans,” Neudorf said in a statement. “This includes reviewing all aspects of Alberta’s electricity system, looking for long-term solutions to help lower Albertan’s utility bills.”
Neudorff said the province will provide an updated inflation forecast when the government tables its budget next week.
According to Statistics Canada, lower gas prices played a role in the lowest national inflation rate since June, as well as a decline in grocery price inflation between December and January.
“There’s a lot of positives but we’re still above what the Bank of Canada would like to see,” St-Arnaud said. “They will want to wait to have a proper confirmation that inflation is back to their target. So that will mean probably a headline inflation much closer to two per cent.”
© 2024 Global News, a division of Corus Entertainment Inc.
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2024-02-21 02:17:33Z
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