Alberta tied with Prince Edward Island for the highest annual inflation rate among all provinces in Canada in January, according to data released Wednesday by Statistics Canada.
The federal agency said the Consumer Price Index rose by three per cent in both provinces while Canada’s inflation rate on the whole was 2.4 per cent year-over-year.
“Consumers in Alberta paid 6.6 per cent more for gasoline in January on a year-over-year basis, following a 0.9 per cent increase in December. Carbon pricing was reintroduced in Alberta on January 1, 2020,” said the report.
“Passenger vehicle insurance premiums increased 17.8 per cent on a year-over-year basis in Alberta. A significant share of private passenger vehicle insurers in this province submitted applications to increase rates following the removal of a rate cap, which resulted in Alberta’s largest month-over-month increase in passenger vehicle insurance premiums (+7.6 per cent) since November 2002.
“Consumers in Alberta paid 14.4 per cent more for other passenger vehicle operating expenses on a year-over-year basis in January 2020. This was due, in part, to increases in service fees, including fees for drivers’ licences and passenger vehicle registration, introduced in the 2019-2020 provincial budget.”
Nationally, gasoline prices increased by 11.2 per cent year over year compared with January 2019, when oil prices were low as a result of a global supply glut. Gasoline prices rose with oil prices at the beginning of January 2020, due to concerns over global oil supplies in response to international political events. Later in the month, global oil prices fell following the novel coronavirus outbreak, which caused uncertainty about demand for oil, explained StatsCan.
“The positive contribution to inflation from higher oil prices will certainly unwind in February, bringing the headline down with it. While oil and gasoline prices rose at the start of January, they plummeted through the month as news around the COVID-19 (coronavirus) outbreak spread. The WTI benchmark price is down 12 per cent on average so far in February from its average in January,” said James Marple, Senior Economist with TD Economics, in a commentary note.
“The downside risks to the Canadian economy have intensified with the COVID-19 outbreak and lengthening rail blockades. The Bank of Canada had been hoping for a convincing rebound in growth following the slowdown in the fourth quarter of last year. That now appears unlikely.
“While temporary factors can (once again) be blamed for the ongoing slowdown, a long enough series of temporary setbacks is indistinguishable from something permanent. The consequence – a widening output gap, increased economic slack, and ultimately downward pressure on inflation – will not go unheeded by the central bank.”
Mario Toneguzzi is a business reporter in Calgary.
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