The Consumer Price Index in Canada fell 0.2 per cent on a year-over-year basis in April, down from a 0.9 per cent gain in March, marking the first year-over-year decline in the CPI since September 2009, reported Statistics Canada on Wednesday.
The CPI declined as energy prices fell as a result of the COVID-19 pandemic. Excluding energy, the CPI rose 1.6 per cent, it said.
On a seasonally adjusted monthly basis, the CPI fell 0.7 per cent in April. Excluding food and energy, the seasonally adjusted CPI fell 0.1 per cent.
The federal agency said prices in Alberta were down 0.8 per cent month-over-month and by 0.5 per cent year-over-year.
Nationally, compared with April 2019, consumers paid less for transportation (-4.4 per cent), clothing and footwear (-4.1 per cent), and recreation, education and reading (-0.7 per cent). In contrast, the growth in food prices (+3.4 per cent) accelerated in April 2020 and recorded the largest year-over-year increase of any major component. Prices rose in five of the eight major components on a year-over-year basis, said StatsCan.
“Gasoline prices fell 39.3 per cent on a year-over-year basis in April, the largest year-over-year decline on record. Globally, demand for oil remained low as a result of limited travel, temporary business closures, and lower levels of international trade. An oversupply in the oil market as a result of tensions between major oil-producing countries also contributed to lower prices at the gas pump,” it said.
“Higher sales for dry and preserved foods coincided with higher prices for these goods in April, as demand remained high. Year over year, prices for rice (+9.2 per cent), eggs (+8.8 per cent) and margarine (+7.9 per cent) posted significant increases. These increases coincided with higher demand for non-perishable food products as consumers were encouraged to limit grocery shopping trips as a result of physical distancing measures.”
James Marple, Senior Economist with TD Economics, said the unprecedented economic disruption caused by COVID-19 is showing up in all facets of economic data, including prices.
“Hotels discounted prices heavily, but few people stayed at any price. Clothing retailers, meanwhile, dropped prices to clear inventory, but were restricted to online sales to do so, resulting in an even greater fall in sales volumes,” he said.
“Outside of these categories there is not evidence of widespread deflationary pressures in Canada. While we would caution against placing too much emphasis on the stability in core measures given the difficulty price collectors had in April (and the need to extrapolate prices for items that they could not measure), the fact remains that outside of the most impacted sectors, price growth remains positive. The biggest item bringing down the index – the price at the pumps – has moved higher in recent weeks. With activity slowly normalizing through May, the biggest of the price declines are likely in the rear-view mirror.”
