3 reasons P.E.I.'s inflation news isn't as good as it looks

P.E.I.'s inflation rate plummeted below one per cent in May, the lowest in the country, but Islanders may not be seeing the expected benefits of that.

For almost two years, P.E.I. suffered from the highest inflation in the country as the economy climbed out of the COVID-19 pandemic. In March, the rate on the Island fell below the national average for the first time since January 2021.

From April to May, the annual rate dropped three percentage points, to 0.7 per cent. The national rate was 3.4 per cent.

But much of that reduced inflation is the result of a price drop in one commodity, fuel oil, which fell 51.5 per cent.

Seasonal buying not taken into account

Fuel oil plays a larger role in the overall consumer price index, known as basket weight, for P.E.I. than it does for other parts of the country.

Islanders rely on home heating oilmorethan other Canadians, but it is not something people spend a lot of money on in the summer.That seasonal aspect is not taken into account by Statistics Canada.

"The basket weights are updated every year based on annual expenditures," Statistics Canada said in an email to CBC News.

"At this time, we do not have access to real-time expenditure data at a sufficient level of quality, detail and timeliness that would allow for basket updates at a frequency that would account for changes in seasonal demand."

At the same time, inflation rates on two commodities whichare not seasonal remained high.

The inflation rate for groceries on P.E.I. was still close to double digits in May, at 9.1 per cent, which was about the same as the national rate.

The rate for rental accommodation, a significant driver for P.E.I. inflation throughout the last two and a half years, also remains high. It was 9.0 per cent in May, well above the 5.6 per cent national rate.

In addition to lower fuel oil prices, Islanders have seen some relief at the gas pump, with the gasoline price index down 21.1 per cent.