BC Business
retail | BCBusiness
It might be hard to believe as you go shopping for gifts, fill the car with gas and eat out this holiday season, but consumer prices are falling in B.C. The latest Statistics Canada data show prices of goods and services captured by the benchmark Consumer Price Index (CPI) fell 0.2 per cent in November in B.C. compared to a year earlier. B.C. was the only the only Canadian province to see a drop in consumer prices last month. Nationally, consumer prices rose 0.9 per cent, with the largest rise in Prince Edward Island and the smallest increase in Quebec. Consumer prices have been inching lower for months in B.C., according to the CPI data, which include everything from food and shelter costs to gas and clothing purchases. That’s in part because the results include taxes. Since the province switched back to the PST system from the GST in April, the price of restaurant meals, haircuts and other services included in the CPI index have dropped (at least in many locations). But there’s more at play here than a tax policy change, says Jock Finlayson, executive vice-president and chief policy officer at the Business Council of B.C. He says Canada, alongside places such as the U.S. and Europe, is in the midst of a low inflationary environment as a result of a global economic recovery that is slow and still considered volatile. As a result, prices for a number of goods and services have been flat, or are falling, as businesses try to lure in cost-conscious consumers. “I doubt most people would feel that way in the context of their own consumer spending,” says Finlayson, “but we are in a low-inflation world.” Increased competition is also helping to keep costs down across the retail sector. Competition has intensified in recent months as U.S. discount retailer Target aggressively moves into Canada and rival Wal-Mart expands its stores and offerings in response. That has forced a handful of Canadian retailers to consolidate in recent months to better compete in the new retail landscape. Consider Loblaw, Canada’s largest supermarket chain, which is taking over Shoppers Drug Mart, the country’s biggest pharmacy chain. Sobey’s is also taking over Safeway’s Canadian assets and Hudson’s Bay, Canada’s oldest retailer, recently bought luxury retailer Sak’s Fifth Avenue and is bringing that chain to Canada. “There has been a lot of retail pressure,” says Central 1 Credit Union economist Bryan Yu. “Retail sales have been generally flat or weak in terms of growth for the past year. Businesses haven’t been able to increase their prices.” In B.C., food costs fell 0.6 per cent in November, compared to the same month last year, while clothing and footwear fell 0.5 per cent. Health and personal care costs, which include everything from gym memberships to haircuts, fell 3.1 per cent, largely driven by the change in PST/HST. Some of the few categories that saw price increases over the past year include: alcohol beverages and tobacco products, up 1.7 per cent; gas, up 1.5 per cent; vehicle insurance premiums, up 2.2 per cent, and Internet access services, up a whopping 10.3 per cent, according to Statistics Canada.