VANCOUVER, BC, Feb. 23, 2013/
Troy Media/ – Subdued economic
conditions continued to generate low inflationary pressure in January.
Consumer price levels in B.C. have drifted lower since April,
contributing to 12-month growth in the consumer price index (CPI) of 0.3
per cent, down from 0.4 per cent in December.
Food inflation has eased, while lower year-over-year prices related
to shelter and energy components of the CPI, particularly natural gas,
have also contributed to exceptionally low headline inflation rates
unseen since late 2009.
Average full-year inflation is forecast to reach 1.2 per cent this
year, reflecting rising prices as the year progresses. While the switch
back to the PST is expected to causing a one-time drop of about 0.3 per
cent in the CPI, the tax impact will be offset by global-economy led
gain in food and energy prices.
Retail
Retail sales volume in B.C. fell sharply in December in a sign that
consumers were less than enthused to open their wallets this holiday
season. Adjusted for normal seasonal factors, retail sales dipped 0.9
per cent from November to $5.07 billion. This was the sharpest monthly
decline since June, but still compared favourably to the national
performance which plunged 2.1 per cent over the same time frame.
December sales weakness was evident across most sectors, although
retailers of general merchandise, recreational products, and electronics
and appliance were particularly hard hit. Housing-related activity also
pulled back sharply after a November bounce.
On the whole, consumers battened down the hatches through 2012 with a
general easing of activity through the year. Annual retail sales growth
fell to 2.2 per cent, down from 3.1 per cent in 2011 marking the
weakest provincial gain since the 2009 contraction, and about half of
the average annual gain of 4 per cent since 2000. This was led by weaker
housing associated spending. Sales activity was higher in the Vancouver
CMA, which recorded a 3.7 per cent gain reflecting a relatively
stronger economy and population growth.
Once higher product prices are factored in, real retail sales growth
grew by about 1.4 per cent. Population growth of about 1 per cent means
individual households generally held a tight rein on spending as
economic uncertainty and slow housing market weighed.
We forecast retail sales growth to perk up to 4.2 per cent this year.
While employment and population growth will remain below average,
growth in personal income and shift back to a PST should provide a
modest boost to the retail economy.
Tourism
B.C.’s tourism sector took a hit in December as international tourist
entries to the province fell to a five-month low of 340,060 persons
(seasonally adjusted), down 3 per cent from November, but still up 2.4
per cent from same-month 2011.
The monthly decline was led by a sharp drop in American tourists,
which tumbled 6 per cent to 224,310 visitors which may have reflected
some pull-back in light of political uncertainty. The U.S. decline was
partly offset by a 2.9 per cent gain in overseas visits.
Despite December’s pull-back, the province still managed to eke out a
small annual gain of just over 1 per cent in 2012. U.S. visits edged up
0.9 per cent, while overseas visits gained 1.9 per cent. Latter gains
were dampened by fewer European visitors, which is not surprising given
economic turmoil in that part of the world.
In contrast, the number of visitors from Asia rose 3 per cent on
another surge in Chinese tourism (18 per cent) and a rebound in Japanese
visits. Visits by Australian and New Zealand tourists increased by 6
per cent.
Nonetheless, with only 4.22 million overnight visitors from
international markets, 2012 marked another challenging year for the
provincial tourism sector. The annual tally was broadly in line with
post-recession levels, but remained more than 10 per cent below the
average observed from 2003 through 2007, largely due to fewer U.S
tourists.
December’s weak performance and hand-off to 2013 suggests little in
the way of momentum for B.C.’s tourism economy this year and the economy
is generally unsupportive of a substantial rebound going forward.
While the re-emergence of Vancouver as a port of call for Disney
cruises in 2013 and announcement of TED Talks for 2014 are positive, the
U.S. labour market, high Canadian dollar, and global economic
uncertainty will remain persistent headwinds. On the positive side,
tourism, like other exports, is expected to pivot more towards Asian
markets, particularly China, which should remain a source of robust
demand.
| Central 1 Credit Union