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Statistics Canada: Annual inflation rate turned negative in April

Ottawa – The Consumer Price Index (CPI) fell 0.2% on a year-over-year basis in April, down from a 0.9% gain in March. This was the first year-over-year decline in the CPI since September 2009. The CPI declined as energy prices fell as a result of the COVID-19 pandemic. Excluding energy, the CPI rose 1.6%. On a seasonally adjusted monthly basis, the CPI fell 0.7% in April. Excluding food and energy, the seasonally adjusted CPI fell 0.1%.

Highlights

Compared with April 2019, consumers paid less for transportation (-4.4%), clothing and footwear (-4.1%), and recreation, education and reading (-0.7%). In contrast, the growth in food prices (+3.4%) 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.

Gasoline prices continue to fall

Gasoline prices fell 39.3% 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.

Clothing and footwear prices fall

The clothing and footwear component fell 5.9% on a monthly basis in April 2020, the largest monthly decline in that component on record. In-person shopping for non-essential goods was suspended in many provinces throughout April, leaving clothing retailers with higher inventories since most clothing is typically purchased in-store. As a result, many retailers applied large discounts to online prices to avoid having leftover seasonal stock.

Consumers pay more for food in April

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%), eggs (+8.8%) and margarine (+7.9%) 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. Higher sales and supply issues, including a slowdown in cross-border shipping due to COVID-19, contributed to higher prices for pork (+9.0%) and beef (+8.5%) this April compared with April 2019. Canadian meat processing plants have cut production and some have closed temporarily to protect workers during the pandemic.

Prices for household cleaning products and toilet paper surge

On a monthly basis, the household cleaning products index rose 4.6%. The paper supplies index, which includes toilet paper, increased 6.0%, the largest monthly increase in this index on record. The price increases correspond to higher demand for cleaning products and household supplies in response to COVID-19.

Consumers pay less for traveller accommodation in April

As physical distancing measures limited travel to and within Canada, traveller accommodation prices fell 9.8% in April on a year-over-year basis, the largest decline since 2011. While prices fell in all provinces, there were notable declines in locations near major tourist attractions, including Niagara Falls and the Rocky Mountains. As a result of international travel advisories, travel tours, among other services, were unavailable to consumers in April. A general imputation strategy for services not available to consumers resulted in prices for these trips departing in April being replaced with an imputed movement from the all-items CPI. As a result of this treatment, the travel tours index was up 8.9% compared with April 2019, when prices declined following the peak travel season in February and March.

Regional Highlights

Electricity prices decrease the most in Ontario

Consumers paid 4.1% less for electricity compared with April 2019. Electricity price decreases were most pronounced in Ontario, falling 12.6% on a year-over-year basis. The decline was largely due to the provincial government’s 45-day suspension of time-of-use rates instated on March 24.

 

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