Troy MediaAnnual inflation fell to 1.3 per cent in May, down from the 1.6 per cent reading in April. The CPI held steady relative to April on a seasonally-adjusted basis and has generally decelerated since February, suggesting a stable price environment for consumers and their wallets.
However, the slow pace of CPI also reflects a tempered economic environment in the province that is not conducive to upward price pressure for general goods and services.
The slow pace of annual inflation reflected a tame price environment for shelter-related costs. The CPI sub-index for shelter was unchanged from May 2011. While electricity prices surged 12 per cent, natural gas was down nearly 7 per cent. Homeowners’ replacement cost also fell 3 per cent on a weaker housing market.
Weak inflationary pressure was also observed for health and personal care products (-0.7 per cent) and products related to recreation (0.3 per cent).
Energy prices are no longer exerting the same pressure on top-line inflation readings that was observed through much of 2011 when double-digit gains were the norm. Year-over-year growth in the energy prices in May fell to 2.7 per cent, down from a range of 3.8 per cent to 5.5 per cent observed in the first four months of the year.
Annual growth in gasoline prices fell to only 1.3 per cent. However, the tempered pace of year-over-year growth, which is expected to persist over the next few months, reflected high comparative price levels in 2011. The current economic environment suggests stable to declining gas prices could be in the cards in the coming months which should keep inflation at modest levels.
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