BC Economic Snapshot March 24, 2012

VANCOUVER, BC, Mar. 24, 2012, Troy Media/ – The overall increase in B.C.’s Consumer Price Index (CPI) remained at 1.7 per cent in February for the third consecutive month.
While the year-over-year change was moderate, there were considerable differences in some CPI components – notably energy and food. Excluding food and energy, the CPI rose a mere 1.1 per cent in February, fractionally higher than 0.9 per cent in January.

Energy prices were 4.7 per cent higher than last February, down slightly from 4.8 per cent in January but well below the 9.8 per cent increase seen in all of 2011. Despite the year-over- year easing, energy prices are rising once again.

The CPI energy index rose to 150.4 in February from 148.3 last December with the gasoline index rising to 174.6 from 171.3. In plain terms, the price of regular unleaded gasoline at Vancouver self-service stations rose to 129.5 cents per litre in February from 126.6 in December. Prices in March are up as well and will be reflected in next month’s CPI report.

Food is another component pulling up the CPI. Food prices rose 3.4 per cent in February and were broadly based across food products. Fresh fruit and vegetables were 6.8 per cent and 5.4 per cent higher, respectively. Meat was up 4.8 per cent and dairy products up 4.2 per cent. Food purchased at restaurants rose 1.9 per cent.

Clothing and footwear jumped to 5.7 per cent in February from 3.0 per cent in January. More strikingly was the month-over-month increase at 4.2 per cent, led by a 10.3 per cent surge in women’s clothing.

Components pulling down the CPI were shelter at 0.3 per cent year-over-year, recreation, education, and reading at 1.0 per cent, health and personal care at 1.1 per cent, and alcoholic beverages and tobacco at 1.5 per cent.

Overall CPI inflation is predicted to remain below 2 per cent during 2012 though some components, such as energy and food, will be well above the average. Last year, B.C.’s CPI increased 2.6 per cent.

Retail sales
January retail sales gained on the strength of new vehicle sales. B.C.’s seasonally-adjusted retail sales edged up 0.3 per cent in January from December following a 1.4 per cent drop. Year-over-year sales were up 4.1 per cent in B.C.

Excluding sales at new car dealers, retail sales were up only 2.1 per cent from last January and, excluding sales at all automobile dealers and gasoline stations, sales were up 1.8 per cent.

Metro Vancouver retail sales came in 5 per cent higher than last January, but excluding automobile dealers and gasoline stations, sales were up 2.4 per cent. All retail sales in the rest of B.C. were up 3.3 per cent. After adjustment for price changes, B.C. retail sales in 2002 dollars are estimated to have increased 0.1 per cent in January compared to a 1.2 per cent drop in December.

To put is a longer perspective, inflation-adjusted retail sales increased 0.3 per cent in 2011 versus 2.3 per cent in current dollars. The retail sales outlook appears somewhat better in 2012 but will remain well in the moderate growth range. Our latest forecast is a 3 per cent increase in 2012, which compares to 2.3 per cent in 2011 and 5.3 per cent in 2010.

Factors influencing consumer spending do not point to much faster growth this year, despite record low interest rates. Job and income growth looks to remain moderate with population growth to slide slightly as well.