The Consumer Price Index (CPI) rose 0.9 per cent on a year-over-year basis in March, down from a 2.2 per cent gain in February and year over year, consumer price growth decelerated the most since September 2006, as global economic activity continued to slow due to the COVID-19 outbreak, said Statistics Canada on Wednesday.
Excluding energy, the CPI rose 1.7 per cent.
“Consumers in Alberta paid 21.1 per cent less for natural gas compared with March 2019, when natural gas prices rose in response to colder-than-expected weather. In March, lower consumer prices reflected a decline in commodity prices around the world. As with other energy products, the COVID-19 pandemic resulted in lower demand for natural gas, while inventories remained high,” said the federal agency.
Year over year in Alberta prices were up 0.7 per cent in March. In February, annual inflation was 2.5 per cent.
Overall in Canada, StatsCan said energy prices dropped on lower demand and higher supply.
“Energy prices fell 11.6 per cent on a year-over-year basis in March, driven by the largest one-month price decline since November 2008. Compared with March of last year, consumers paid 21.2 per cent less for gasoline, stemming from low crude oil prices, which also resulted in lower prices for fuel oil and other fuels (-9.5 per cent) and fuel, parts and accessories for recreational vehicles (-18.5 per cent),” it said.
“Crude oil prices fell in March as a result of lower demand as global economic activity, trade and travel slowed in response to the COVID-19 outbreak, as well as an oversupply of oil amid tensions between oil-producing nations. The year-over-year decline in energy prices was accentuated by an increase in gasoline prices in March 2019, when crude oil prices began to recover from a sustained supply glut, which has fallen out of the 12-month movement.”
“While prices for traveller accommodation declined in most provinces, prices decreased the most in Alberta (-10.8 per cent), largely influenced by lower demand as a result of limited tourism to Rocky Mountain resort towns,” added the federal agency.
“Inflation is the least of anyone’s concerns at the moment, but it is notable that the mandated closure of large swathes of the economy in late March is having a profound effect on price growth. This is yet another data series showing unprecedented movements and which will continue to do so at least through the month of April,” said James Marple, Senior Economist, with TD Economics.
“The good news is that with signs that the virus curve is flattening, policy makers are now looking to gradually re-open economies in May. After two months of horrific data, we may finally be through the worst. Of course, this assumes that measures are removed slowly enough to avoid another increase in infections. Fingers firmly crossed.”
