Inflation cuts consumers’ buying power in province

This year, dollars in Saskatchewan aren’t stretching like they used to.

In fact, wage earners in the province are experiencing the first reduction to their buying power in 13 years, according to Doug Elliott, publisher of Sask Trends Monitor.

Consumer Price Index (CPI) data released Friday by Statistics Canada indicates Saskatchewan’s annual rate of inflation is two per cent. CPI data is generated by comparing, over time, the price of a set collection of goods and services. The resulting increase or decrease in price represents the inflation rate.

Despite the relatively low inflation rate, Saskatchewan consumers may be feeling the effects.

“You’ll have needed a two per cent increase in your wage just to hold your own, so to speak, in terms of the purchasing power of your paycheque,” Elliott said.

Residents whose paycheques have kept pace are likely few and far between, as Elliott claims Saskatchewan wages increased by an average of only 0.4 per cent over the past year, marking a 1.6 per cent decline in purchasing power.

Elliott said people in their 60s may remember when inflation rates were in the seven- to eightper cent range.

For the past three years, the rate has been below two per cent, he said, noting it reached 2.4 per cent in 2014.

“This is the new normal, both in Saskatchewan and Canada, and actually in the developed world,” said Elliott.

Still, the rate in Saskatchewan is tied with British Columbia as the highest among the provinces.

“That’s mostly because last spring ’s budget and the increases in PST all contributed to the inflation,” Elliott said.

He estimates the province’s “fundamental inflation” rate is around 1.5 per cent, which would put it on par with Manitoba.

The two per cent figure represented in the CPI data, he added, was “bumped up” by the increase to and expansion of provincial sales tax last spring.

For the next six months, he said, Saskatchewan can expect the rate to remain between two to twoand-a-half per cent.

Assuming there are no largescale tax changes made in the next budget, inflation rates should begin to return to normal next spring, he noted, as this year’s tax changes will have “worked their way through the system.”

Nationally, the inflation rate is 1.4 per cent.