July 21, 2012
VANCOUVER, BC, Jul 21, 2012/ Troy Media/ – Consumer price inflation in B.C. edged higher in June to 1.5 per cent, following a temporary drop to 1.3 per cent in May. Despite the gain, inflation remained near the lowest level in two-years and below the 2.7 per cent reading recorded in June of last year.
Consumer prices have stayed relatively flat in recent months, reflecting a tempered economic environment, which is non-conducive to upward price pressure on general goods and services.
The consumer price index (CPI) rose less than 0.1 per cent from May on a seasonally-adjusted basis. In contrast, monthly gains in the first quarter were significantly stronger and consistently at, or above, 0.2 per cent.
The slow pace of annual inflation reflected a tame price environment for shelter-related costs, particularly for owned accommodations. The CPI sub-index for shelter was unchanged from June 2011.
Natural gas prices were down nearly 7 per cent. Weaker inflation was also recorded for health and personal care products, which rose 0.6 per cent from a year earlier, while recreational and education related prices were up 0.3 per cent. Clothing and footwear prices were higher than last year by 4 per cent, while increased vehicle prices pushed the transportation sub-indices up 3 per cent.
While annual growth in food-related prices was moderate in June at 2 per cent, droughts in the U.S. Midwest could mean a sharper gain in food prices in the quarters ahead. Rising corn and wheat prices will likely translate into a higher related-product pricing and have knock-on effects on meat prices as animal feed costs rise.
Tourism
It was a spring of discontent for B.C.’s tourism economy as little positive momentum was generated in the flow of international visitors amidst deteriorating economic conditions in Europe, and economic growth slowdowns in the U.S. and Asian markets.
The value of the loonie, while down from early-year levels relative to its global trading partners, remained elevated, making Canada a relatively expensive option for tourists.
The yo-yo pattern typical of tourism activity in recent years continued into May as total international tourist entries to B.C. pulled back following an April gain. Total visits dipped 1.7 per cent from April to a seasonally-adjusted 347,090 visitors. A monthly rebound in overseas tourists was unable to fully offset a near 4 per cent pull-back from the U.S.
While still near the upper end of the range observed since 2010, visits were still well below levels observed in the mid-2000s, largely a reflection of moribund U.S. demand. Through May, total visits reached nearly 1.27 million persons, up 2 per cent from same-period in 2011. Gains were almost entirely attributable to overseas visits, which rose 5 per cent, while U.S. visits edged up 0.5 per cent.
Total year-to-date visits were down more than 15 per cent from 2005. While overseas visitors have provided some support to B.C. tourism, gains haven’t been uniform. Among major source countries, year-to-date travel is up more than 20 per cent from China, Mexico and Japan, although the latter reflects sharp earthquake related declines in 2011.
Meanwhile, visits from South Korea are down more than 10 per cent, while entries from Germany have fallen 3 per cent.
Construction
A jump in industrial project construction pulled investment in non-residential buildings higher during the second quarter. Total current-dollar investment rose to a seasonally-adjusted $1.2 billion during the second quarter, marking a quarterly gain of 2.3 per cent.
Gains reflected both an increase in actual building activity and higher construction-related prices, as constant-dollar investment rose by a modest 1.6 per cent.
While industrial building activity makes up the lowest share of total investment, there has been a relative flurry of activity in the sector in recent quarters. Current-dollar investment in industrial buildings rose for a ninth consecutive quarter and gained 22 per cent from the first quarter to reach $136.6 million. Gains correspond to plant/factory activity in the north and the surge in regional building permit activity earlier in the year.
Meanwhile, investment in commercial-buildings held steady, rising 2 per cent from the first quarter. However, commercial activity has generally been weak following the recession; likely a reflection of tempered economic and retail conditions across the province. Public-sector building activity fell for a fourth consecutive quarter, dropping 3.5 per cent on a quarterly basis to $348 million.
Despite the second quarter gain in investment and the ongoing strength in industrial activity, the contribution of non-residential building investment on economic growth has lagged this year. Through the first half of 2012, current-dollar investment in non-residential buildings was down 8 per cent, while constant-dollar investment has declined 11 per cent.
Declines in activity, attributed to the commercial and public-sector, are reflective of the tempered economic environment, a period of belt-tightening on the part of the government, and completion of projects related to fiscal stimulus.
