B.C.’s rate of consumer price inflation decelerated in September. On a year-over-year basis, the consumer price index (CPI) had decreased to 3.3 per cent from last month’s 3.8 per cent.
On a monthly basis, the provincial CPI rose 0.1 per cent.
The numbers were in line with national figures, which were also down. Core CPI (excluding energy and food) in B.C. was also up 0.1 per cent from last month, the ninth consecutive monthly increase, although inflation momentum eased.
It is noteworthy that after exceeding national patterns earlier in the year, inflation has trailed in recent months.
Year-over-year core CPI was down from 3.5 per cent in August to 3.2 per cent in September. Goods prices were down 0.7 per cent over the month, reversing most of the increase in August. Services prices continued to grow at 0.8 per cent from last month.
Both semi-durable and durable goods prices saw a monthly decline of 1.8 per cent and 1.6 per cent, respectively, while non-durable goods saw a slight increase of 0.1 per cent. Energy prices were also down 0.3 per cent for the month in addition to being down 1.4 per cent over the past 12 months. Transportation and gasoline prices were also down 0.8 per cent and 0.6 per cent, respectively, as were household operations – down 1.8 per cent monthly. Product groups that saw a monthly increase include shelter costs (up 1.2 per cent), health and personal care (up 0.8 per cent) and recreation, education and reading (up 0.6 per cent).
B.C. urban-area housing starts fell sharply in September to a seasonally adjusted annualized pace of 37,030 units, compared to 45,771 units in August. With the latest dip, provincial housing starts fell well below the robust six-month moving average of 48,318 units. Multi-family home starts dropped 20.5 per cent, while single-detached starts also declined (10.1 per cent). Though monthly starts are volatile, this could reflect a period of retrenchment as weaker market conditions catch up to construction.
Among census metropolitan areas (CMAs), Vancouver saw a 17-per-cent decrease in housing starts in September to an annualized 25,861 units, the lowest level since February. The other major markets also reported significant declines in new housing construction. In Victoria, starts dropped 67.7 per cent following a prior month’s surge. Chilliwack also saw a decline of 47.3 per cent in housing starts in September. In contrast, the rest of the areas reported increases in their housing starts results during the same period, yet the number of starts among those areas was much smaller compared to the major CMAs.
Volatility in monthly housing starts is not unusual given the scale of multi-family projects. Despite the third consecutive monthly decline in September, multi-unit starts have been strong. B.C.’s actual unadjusted urban-area housing starts in the first nine months of 2023 increased by 11.3 per cent to 35,052 units when compared to the same period in 2022. This was driven entirely by the increase in multi-family starts (up 19.6 per cent).
Meanwhile, single-detached unit starts declined by 25.6 per cent to 4,336 units compared to the same period last year. In Vancouver, total housing starts from January to September 2023 were up 37.4 per cent in comparison to 2022. In contrast, Kelowna recorded fewer total housing starts, down 15.2 per cent. Declines were also seen in other CMAs, such as Victoria and Abbotsford-Mission, down by 4.9 per cent and 55.6 per cent, respectively.
We anticipate starts to turn lower given fewer pre-sales in the past year and high interest rates impacting the ability of buyers to purchase in the short term.
Bryan Yu is chief economist at Central 1.