Consumer price inflation falls to lowest level in more than a year
Household budgets caught a break in December as annual growth in B. C.’ s consumer price index ( CPI) fell to 1.7 per cent, the lowest inflation reading since September 2010. December’s monthly CPI decline of 0.8 per cent from November was unusually steep when compared to the average over the past two decades.
Food and energy costs continued to push inflation up. Excluding these categories, CPI growth was closer to 0.9 per cent. While food prices continue to trend higher, energy prices ( particularly gasoline) have fallen in recent months reflecting the impact of economic uncertainty on crude prices.
A repeat of the rapid climb in gas prices seen in 2011 is unlikely this year provided the economy remains relatively subdued and Middle East tensions do not erupt further.
Subdued domestic demand was also evident in December price trends. While still up 3.3 per cent from the previous year, clothing prices fell 4.2 per cent from November. This marked one of the steepest November to-December declines on record and reflected steep discounting on the part of retailers during the holiday season.
MLS sales close 2011 with 5th consecutive gain
MLS home sales in B. C. closed 2011 with a fifth consecutive gain in monthly sales. Home sales rose 1.6 per cent from November to a seasonallyadjusted 6,530 units in December, their highest level since March. Gains in the Kamloops, South Okanagan, Fraser Valley and Kootenay real estate board regions drove monthly sales growth. Meanwhile Vancouver Island, excluding Victoria, dampened activity.
The recent uptrend in activity reflected stable- to- rising sales activity in most regional markets. Stronger fourth quarter employment gains and expectations that mortgage rates will remain lower for longer provided support for most markets in the province. But overall gains have generally been modest.
December activity pushed annual sales in B. C. up to 76,720 units. While this was 2.8 per cent higher than 2010, it was below the 84,000 units averaged since 2000 and the 96,000 units averaged from 2002 through 2007. The Lower Mainland and northern B. C. markets accounted for all of the net sales gains in 2011.
Most regions remained oversupplied, leading to downward pressure on price levels. The average MLS price fell to a seasonallyadjusted $ 523,270 in December, down 3.1 per cent from November. The average provincial price has declined 10 per cent since the spring. Part of this is due to a shifting composition of sales as Lower Mainland sales accounted for a larger proportion of early- year activity. Adjusting for these compositional changes the provincial price decline was more modest at six per cent relative to early- year peaks.
Despite the recent downtrend in prices, the average annual MLS price reached $ 561,300 in 2011, up 11.1 per cent from 2010. Gains in northern B. C. markets and the Lower Mainland offset declines in other real estate board regions.
International tourist visits rise
International tourist visits to B. C. rebounded in November following an October dip. Total visits rose to a seasonallyadjusted 345,200 persons in November, a 2.9 per cent gain from the previous month.
U. S. tourist entries grew 3.1 per cent from October and have edged higher since July, following a downtrend in the first half of the year. Despite the recent gains, visits from our southern neighbours remain low, and within the weak range observed since late 2009.
Meanwhile, the number of overseas visitors to B. C. rose 2.5 per cent in November, reversing the previous month’s decline. Overseas visits have generally been stable near the 15- year average, but still shy of pre- recession highs.
The tourist market hasn’t generated any significant upward traction since the recession ( with the exception of the Olympic Winter Games), and this weak state is expected to persist through 2012. Global economic uncertainty, a weak ( albeit improving) U. S. labour market, and the elevated Canadian dollar do not bode well for a rebound in tourist visits over the next year.