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Inflation spikes up in Manitoba

Faster than rest of nation; more coming due to PST

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Gas prices have been on the rise in Manitoba -- and have been rising even more quickly than the national average. Prices for fresh fruit and vegetables are also up.

JESSICA BURTNICK / WINNIPEG FREE PRESS Enlarge Image

Gas prices have been on the rise in Manitoba -- and have been rising even more quickly than the national average. Prices for fresh fruit and vegetables are also up. Photo Store

The inflation rate rose twice as quickly in Manitoba compared to the rest of the country in June and economists say this province will see another hit in July with the effects of the one-percentage-point increase in the PST.

Statistics Canada reported the inflation rate -- or the consumer price index (CPI) -- rose 2.7 per cent last month in Manitoba, compared to 1.2 per cent in the rest of the country.

That followed a 1.8 per cent year-over-year increase in this province in May.

Gasoline prices in Manitoba, which typically track lower than the national averages, rose 10.7 per cent in June compared to 4.6 per cent nationally. The province also experienced one of the largest year-over-year price increases for cigarettes and for passenger-vehicle registration fees.

In terms of month-to-month price increases in Manitoba, gasoline was up nine per cent and fresh vegetables were up 5.5 per cent.

Paul Ferley, assistant chief economist with RBC in Toronto, said, "Manitoba inflation really shot up in June and the introduction of the PST increase will probably result in Manitoba continuing to outpace the country."

'There were lots of stations in Western Canada running out of gas (in June). I saw with my own eyes stations in Regina and Calgary that were running out of gas'

-- GasBuddy.com's Jason Toews

He was referring to the one-percentage-point increase in the PST that came into effect the first of this month.

Critics, such as Colin Craig of the Canadian Taxpayers Association, pointed out the increase translates into a 14.28 per cent increase in the sales tax and a bigger bite than politicians would have us believe.

"We look at the affordability of government," Craig said. "And the big problem here is that taxes and fees are going up faster than paycheques, and that drives inflation because businesses have to pay a lot of those same taxes."

Overall across the country, consumer prices were higher in six of the eight major components Statistics Canada tracks. The exceptions were health and personal-care costs, and recreation, education and reading.

The national increase from 0.7 per cent in May put the Canadian inflation rate back into the desired range of between one and three per cent the Bank of Canada strives to achieve.

Although Manitoba's spike in June was noteworthy -- the next-closest increase was 2.3 per cent in Alberta and 2.2 per cent in P.E.I. -- it's not like this province is turning into Honduras in the 1980s.

"In terms of what the Bank of Canada is shooting for -- the mid-range target is 2.0 per cent -- Manitoba is within the two to three per cent range," Ferley said. "We're not flagging any major problem (in Manitoba). It is above average, but growth in the province is also above average."

Ferley said the bank economists would typically look at a three-month average for a more reliable gauge. During the first quarter of this year, inflation was up 1.9 per cent in Manitoba and in the second quarter it was 2.1 per cent.

Emanuella Enenajor, an economist with CIBC, agreed.

"I don't know if I would read too much into that (the inflation-rate spike in June), because provincial CPI data can be quite volatile," she said. "We'll need to see the next couple of months of data before we can come to the conclusion of what is driving that."

Clearly driving some of that change in June was a temporary and regional spike in gas prices in Manitoba.

Jason Toews, the Regina-based president and founder of GasBuddy.com, which operates a number of websites including Winnipeggasprices.com, said disruption in production at a Suncor refinery near Edmonton was the cause of the price increases that also resulted in increases in Alberta and Saskatchewan, but to a lesser degree.

Prices have come down, but they are on the way back up again.

"There were lots of stations in Western Canada running out of gas (in June)," Toews said. "I saw with my own eyes stations in Regina and Calgary that were running out of gas."

Statistics Canada has gasoline prices up 9.2 per cent in Alberta in June and 6.4 per cent in Saskatchewan.

GasBuddy.com charts show from July 2012 up until the end of May 2013, gas prices in Winnipeg were lower than the national average, but they spiked above the Canadian average at that point. Local prices met the national average early in July and continue to fall below that.

But when it comes to elements of the core CPI government fees and taxes would impact, critics such as Craig believe the province is not helping.

He said Statistics Canada's latest numbers on the average pay increases that came out in May show Manitoba's weekly wages were up 1.8 per cent.

"Then you look at the Winnipeg School Division, which raised taxes 6.7 per cent -- that's three times what the average person's paycheque went up," Craig said. "The year before, those taxes went up by 7.8 per cent and city property taxes are 3.9 per cent. And then there's the eight per cent increases in Hydro rates announced over the past year, water and sewer rate increases and all those things are going up faster than what people can keep up with."

An official from the province's cabinet communications office, said, "Manitoba is one of the most affordable provinces to live in, with an unemployment rate that's amongst the lowest in Canada and average wages that are growing faster than inflation. The inflation rate over the last year (1.8 per cent) is consistent with the province's five-year average (1.6 per cent)."

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition July 20, 2013 B6

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