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Winnipeg Free Press - PRINT EDITION

Manitoba enjoys inflation deflation

By: Murray McNeill

Posted: 07/24/2010 1:00 AM | Comments: 0 (including replies)

MANITOBA was the land inflation forgot in June and that, combined with escalating house values, created the best of all worlds for many Manitobans.

Not only was their biggest asset increasing in value -- the average selling price of a detached home in Winnipeg was up 12 per cent last month from a year earlier -- but they paid less for some of the goods they bought.

New Statistics Canada figures issued Friday show Manitoba was the only province to show negative inflation growth in June (-0.2 per cent). That means it cost 0.2 per cent less to buy the basket of consumer goods and services the agency uses in calculating the cost of living than it did in June of last year, when the global recession was in full swing.

The rest of the provinces all posted annual cost-of-living increases of between 0.3 and 1.6 per cent, while Canada's annual inflation rate fell to its lowest level in eight months at one per cent.

But before you book a party room, remember it's just a one-month snapshot.

"I don't expect for the full year we'll see deflation in Manitoba," Michael Benarroch, dean of the University of Winnipeg's Faculty of Business and Economics, said in an interview Friday.

But it's sweet while it lasts, he added -- and a bit unusual, since you don't usually have falling consumer prices during an economic recovery.

"But having said that, we're in a kind of odd recovery," Benarroch said, noting some economic indicators have been encouraging and others not so encouraging.

For example, in May (the latest month for which such statistics are available), manufacturing shipments and wholesale sales were down in Manitoba, but retail sales grew at one of the fastest rates in the country. That suggests Manitobans were taking advantage of their increased buying power, while manufacturers and exporters were still struggling with the fallout from a higher-valued Canadian dollar and a weak U.S. economic recovery.

Benarroch and University of Manitoba economics professor John McCallum said while Manitoba fared the best, inflation was tame right across the country in June.

McCallum said the provinces with the highest inflation rates tend to be the ones with the fastest-growing economies.

As their economies expand, consumers and businesses tend to buy more products and that puts upward pressure on prices.

-- with files from The Canadian Press

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition July 24, 2010 B4

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