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Consumer prices still below Bank of Canada target

Consumer prices still below Bank of Canada target

Posted on: 11/17/2017 | Author: ATB Financial's Economics + Research Team

The topic of price inflation has been all the rage in the US, but it’s important from an Alberta perspective too. If the cost of goods rises too much, consumers are affected negatively. If prices fall too fast for too long, there are severe effects on the economy and on economic growth. Here in Alberta, prices have been pretty stable given the economic backdrop.

The latest data shows that Alberta’s Consumer Price Index in October was marginally higher than September (+0.43 per cent). Compared to one year ago, the price of goods and services has increased 1.3 per cent, falling below the Bank of Canada’s target of two per cent. As of October, Alberta’s inflation rate was a tenth of a per cent below the national average.

In October, Albertans paid more for virtually all types of goods and services, but the categories that saw the biggest price gains were energy, health and personal care (items and services) as well as alcoholic beverages.

Energy, which includes natural gas, fuel oil, gasoline and fuel, parts and accessories for recreational vehicles grew close to five per cent from last year. The price of health and personal care items and services grew nearly three per cent while beer, wine and spirits were 2.5 per cent higher than in October of 2016.

Like the US, both Alberta and Canada have experienced a lower inflation rate over the past couple of years. While great news for shoppers in the short run, little to no price inflation could cause people to sit on their wallets and wait for a better deal in the future, hindering economic progress. The current inflation rate in Alberta is lower than the Bank of Canada’s target but is expected to rise as our economy recovers from two years of recession.

CPI inflation, graph

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