Is the end in sight?
Over the last year skyrocketing, historically high, inflation rates have affected every corner of the global economy. While the consequences could/can be felt throughout the breadth of Canada the real estate market in BC took a sizable hit because home prices had spike so significantly the year previously.
With record inflation rates came endless mortgage rate hikes, greater building costs, increased rental rates, and the rising value of assets as a direct result of supply. While the inflation has not yet receded to an ‘acceptable’ level trends have shown signs of hope. The British Columbia Real Estate Association recently published a March inflation review and had the following to say about BC’s current standing:
Canadian prices, as measured by the Consumer Price Index (CPI), rose 4.3 per cent on a year-over-year basis in March, a decrease from the 5.2 per cent rate in February. This large drop was mostly due to base year effects; the CPI was rising quickly this month last year and fuel prices in particular are substantially down from a year ago. Grocery prices continue to rise quickly, up 9.7 per cent from last year, following seven consecutive months of double-digit increases. Mortgage interest costs were up 26.4 per cent year-over-year, the fastest pace on record, as Canadians renewed or initiated higher-rate mortgages. In contrast, the Homeowner's Replacement Cost, which tracks home prices, continued to slow, increasing 1.7 per cent year-over-year in March, down from 3.3 per cent in February. Month-over-month, on a seasonally-adjusted basis, prices were up 0.1 per cent in March. In BC, consumer prices rose 4.7 per cent year-over-year.
There continue to be encouraging signs that the bout of rapid price appreciation that began in February of last year is waning. Although food prices and mortgage interest costs continue to rise quickly, most other categories in the index are trending back toward normal price trends. Indeed, excluding mortgage costs, the year-over-year change in CPI was just 3.6 per cent. The Bank of Canada's measures of core inflation, which strip out volatile components, each ticked downwards for a fourth month in a row. The three-month annualized change in seasonally-adjusted CPI is now well within the bank's 1-3 per cent target range, hitting 2.1 per cent in March. Still, although year-over-year price appreciation may be moderating, at 4.3 per cent it is still well above the Bank of Canada's 2 per cent target. While the Bank of Canada held the overnight rate steady at 4.5 per cent for a second consecutive meeting in April, the Bank could change course if inflation does not continue to cool or if the economy dips toward recession.
Click Here for BCREA Full Economic Breakdown
CBC News took a more micro economic look at the current inflation trends and focused in on both fuel and grocery pricing:
Statistics Canada reported Tuesday that gasoline prices fell by 13.8 per cent in the year up to March, which is the fastest decline in the price of gas since July of 2020. But that decline comes from an abnormally high bar, as March 2022 saw pump prices spike because of the Russian invasion of Ukraine...
Food prices, which have spiked at their fastest pace in decades this year, are showing some welcome signs of decelerating, but are still going up at a pace that's more than twice as fast as the overall inflation rate.
The data agency reported that food prices went up at a 9.7 per cent pace in the year up to March, a slowdown from the 10.6 per cent pace seen the previous month.
Price increases for fresh produce are slowing down, with fresh fruit increasing by 7.1 per cent and vegetables by 10.8 per cent, respectively. Both those figures are down from 10.5 and 13.4 per cent the month before.
That slowdown is welcome news to consumers, who have had to stretch every dollar to put food on the table this year.
Click Here to read CBC's full article: Canada's inflation rate cools to 4.3% in March
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