Inflation rising again on P.E.I., but consumers may avoid the worst of it
P.E.I.'s annual rate of inflation rose to 3.2 per cent in May, above the national average and the second-highest rate in the country, but Islanders may be able to take a pass on some items where prices are up the most.
Canada's consumer price index was up 2.9 per cent last month compared to May of 2023. Only Nova Scotia had a higher rate of increase than P.E.I.'s, coming in at 3.7 per cent.
Inflation was relatively flat through the latter half of 2023 but began to rise again at the beginning of the year.
While P.E.I.'s inflation rate is well above the Bank of Canada's two per cent target for inflation, a closer look shows prices are not rising as quickly in many core areas.
"Energy prices are once again the main driver of inflation on the Island compared to the national average," said UPEI economist George Jia. "Nationally, energy prices increased by 4.1 per cent year over year, whereas on the Island they surged by a significant 11.7 per cent."
Fuel oil is up a whopping 23.6 per cent, but the increase won't sting as much until later in the year because not a lot of heating oil is bought in the summer. Gasoline, up 10.6 per cent, is more of a worry for those who can't avoid driving.
Inflation on gas is partly due to increases in the fuel charge.
The inflation on gas comes to about 15 cents a litre, about seven cents of which can be attributed to the increased fuel charge. The fuel charge was added to heating oil last July, but then removed again, so there was no impact on heating oil's annual inflation rate from the federal fuel charge.
If gasoline prices stay relatively steady this summer, the inflation rate will go down, said UPEI economics professor Jim Sentance.
"A year ago, oil prices and gas prices were a good chunk lower than they are now," Sentence said. "If they just stay where they are now … the year-over-year effect will diminish."
On the good news front, grocery inflation remains moderate, with prices up an average of just 2.2 per cent on P.E.I. Those fond of dining out have found those prices continue to rise at a higher rate, up 5.9 per cent.
Rented accommodation, where prices spiked in 2021 and 2022, saw relatively moderate increases at 3.3 per cent. Owned accommodation costs were higher, at 4.0 per cent, driven by the higher cost of fuel oil.
