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Blog by Kevin Wong

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B.C. Inflation Holds Steady In April, Home Sales Dip

Consumer price growth in B.C. held steady in April at an annual rate of 1.6 per cent, up slightly from the growth rate reported in March. B.C.’s inflation rate has generally trended lower since September providing some relief on consumer wallets. Relative to other provinces, consumer price inflation in B.C. was tame with only Alberta recording lower growth.

The chief tempering factors on consumer price index (CPI) growth in April included shelter costs, which were up only 0.4 per cent from April 2011, as index levels associated with replacement costs fell three per cent, and natural gas prices also declined by 6.7 per cent. The latter being a boon for consumers, but negative for the industry.

Meanwhile, year-over-year changes in health and personal care products were down slightly from the April of last year (-0.1 per cent), while price levels related to recreation products fell 1.3 per cent.

Product groups exhibiting stronger annual growth included food (2.5 per cent), clothing and footwear (6.8 per cent) and transportation (3.0 per cent). Food prices have been flat in early 2012 following an upward trend in 2011, contributing to a downward trend in annual food inflation.

Gasoline prices were up 3.1 per cent from the April 2011. While annual price growth has declined since late in the third quarter, gas prices have picked up this year following a fourth quarter decline. The gas price index surpassed the 2011 peak in April. If prices hold steady, which is reasonable given the summer driving season is nearly upon us, gasoline will likely exert some upward pressure on annual general inflation this summer, reflecting price declines observed last year.

Provincial MLS sales dip

Home sales in B.C. dipped in April to the lowest level since September as a downshift in activity in the Lower Mainland-Southwest (LMSW) which includes Metro Vancouver and Fraser Valley regions offset gains in other regional markets. Total MLS sales fell 1.8 per cent from March to a seasonally adjusted 6,160 units in April, extending the weaker sales pace observed since January.

Sales in the LMSW fell five per cent from March, while the rest of the province gained three per cent. Markets with the largest sales gains included Vancouver Island (excluding Victoria) which recorded a sales gain of six per cent, the Kootenay (10 per cent), and the northeast (10 per cent).

B.C.’s bright spot for the housing market (and the economy) is the north. Sales continued to trend higher in April and are approaching pre-recession highs as resource-related investments and activity have driven demand and price levels higher.

B.C.’s average MLS price dropped to the lowest level since late 2010 in April, slipping 2.7 per cent from March to a seasonally adjusted $511,530, which was 11 per cent lower than one-year prior. However, this decline likely overestimates actual price movements given the impact that changing geographic and product composition has on average figures. International tourism falls

International tourism visits to B.C. fell for a second straight month in March after hitting a one-year high in January. Total seasonally adjusted visits fell 1 per cent from February to 349,600 entries. Overseas visits led the decline, dropping 1.6 per cent, while U.S. visits fell by a more modest 0.7 per cent.

Although tourist visits have outpaced the first quarter of 2011 by 6 per cent, trend levels remain weak when compared to levels observed in the mid-2000s, largely reflecting the long-term downtrend in U.S. visitors.