The consecutive declines in inflation since the 8.1% peak in June 2022 have been interrupted by a small increase last April. The consumer price index (CPI) accelerated to 4.4% year-over-year in April, slightly higher than the 4.3% rise last March. Compared to April 2022, higher rent prices and mortgage interest costs contributed the most to the all-items CPI increase in April this year.
On a monthly basis, the CPI in April was up 0.7%, following a 0.5% gain in March. Prices for gasoline contributed the most to the headline month-over-month increase. Gasoline prices rose 6.3% in April compared with March, the highest monthly increase since October last year. However, gas prices in April 2023 were 7.7% lower than a year ago mainly due to Russia’s invasion of Ukraine.
The Aggregate Composite MLS® Home Price Index (HPI) rose to 1.6% in April 2023 on a monthly basis. This was broad-based and a significant increase for a single month. The non-seasonally adjusted national average home price was $716,000 last April, down 3.9% from a year ago and up $103,500 from January 2023, largely due to sales rebounds in the GTA and B.C Lower Mainland.
According to the Canadian Real Estate Association, April home sales increased by 11.3% month-over-month. This broad-based sales increase was led by the B.C. Lower Mainland and the Greater Toronto Area. Despite significantly low housing inventory, homebuyers are taking advantage of the paused interest rate hikes. With national sales on the rise and new listings falling short, the sales-to-new-listings ratio went up 70.2%, up from 64.1% in March.
The slight increase last April is another reminder that there is still a long way to go to reach the 2% inflation target. The policy rate is currently paused at 4.5%. Chief economist, Dr. Sherry Cooper expects that the Bank of Canada will most likely continue to pause on June 7th for the next rate announcement. Dr. Cooper also predicts that no rate cuts will be made for the remainder of 2023. While the labour markets remain strong and with housing activity on the rise, the BoC must tread carefully to reach its 2% target next year.
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