ECONOMIC NEWS

François Dupuis, Vice-President and Chief Economist • Mathieu D’Anjou, Deputy Chief Economist Hélène Bégin, Senior Economist • Benoit P. Durocher, Senior Economist • Francis Généreux, Senior Economist • Joëlle Noreau, Senior Economist

Desjardins, Economic Studies: 418-835-2450 or 1 866-835-8444, ext. 5562450 • desjardins.economics@desjardins.com • desjardins.com/economics

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Quebec: The 2018 Inflation Rate Is below 2% HIGHLIGHTS

f In December 2018, the consumer price index (CPI) rose 1.1% from December 2017. The increase was lower than it was for Canada as a whole (+2.0%).

f Overall for 2018, Quebec’s inflation rate accelerated to 1.7% after hovering close to 1% for the previous five years. This was the largest annual increase since 2012 (+2.1%).

f Quebec’s CPI growth of 1.7% for 2018 was below that of Canada (+2.3%) and Ontario (+2.4%).

f Nearly all components posted faster gains last year in Quebec.

f The food price index rose 1.0% in 2018, while the shelter index advanced 1.5%.

f Energy prices increased 6.5% last year, putting upside pressure on total inflation. The CPI that excludes the energy component rose 1.3%.

ECONOMIC STUDIES | JANUARY 18, 2019

COMMENTS

Although Quebec’s inflation rate accelerated last year, it remained relatively low, i.e., below the 2% mark. Prices for basic goods such as food, shelter and clothing, as well as living expenses, all posted increases of less than 1.5%. However, the transportation component climbed 4.4% due to higher costs for energy, air transportation and insurance. Note that oil and gas prices shot up in the first half of 2018, then tumbled after that.

IMPLICATIONS

Although the inflation rate rose more quickly last year, this did not erode Quebecers’ purchasing power. The labour market tightened further, posting an annual unemployment rate of 5.5%. This helped push workers’ wages up by about 3.5% in 2018, outpacing the 1.7% inflation rate.

Hélène Bégin, Senior Economist

GRAPH 1Inflation is up in 2018 after several weak years

Sources: Statistics Canada and Desjardins, Economic Studies

Consumer price index

Variation in %

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2010 2011 2012 2013 2014 2015 2016 2017 2018

#1 BEST OVERALLFORECASTER - CANADA

0.1

0.5

0.6

0.8

1.0

1.5

1.7

2.7

4.4

0 1 2 3 4 5

Recreation, education and reading

Household operations

Health and personal care

Clothing and footwear

Food

Shelter

All items

Alcoholic beverages and tobacco

Transportation

GRAPH 2Few CPI components rose sharply

CPI: Consumer price indexSources: Statistics Canada and Desjardins, Economic Studies

2018

Annual variation in %