November 30, 2023
SUMMARY
Ontario headline inflation decreased from 3.6% in September to 3.3% in October. Inflation excluding food and energy, however, increased from 3.2% to 3.7%. The Building Construction Price Index slowed on a quarter-to-quarter basis in Q3 2023, with notable deceleration in the Ottawa area. Several materials also continued their downward trend in year-over-year prices, while cement, glass, and non-metallic mineral products remain elevated.
ONTARIO CONSUMER PRICE INDEX
Ontario year-over-year headline inflation decreased from 3.6% in September to 3.3% in October. This was driven largely by a decline in both goods and energy inflation. Goods inflation fell from 3.7% to 1.9%, while energy fell from 4.3% to -6.5%. However, core inflation increased from 3.2% to 3.7% as services price inflation increased from 3.6% to 4.4%.
BUILDING CONSTRUCTION PRICE INDEX
The building construction price index also saw some relief. This data series consists of regional data from 11 census metropolitan areas (CMAs) across Canada, including major cities from most provinces. Looking at the non-residential sector using the 11 CMA composite index, inflation increased just 0.9% compared to Q2 2023.
When narrowing in on the Ontario census metropolitan areas (Toronto and Ottawa), the index increased only 1.1% for both CMAs. This was identical to the Q2 2023 building construction price inflation in Toronto and down from the 2.6% increase in Ottawa.
By type of structure, the lowest increase was in the institutional sector, which rose by 0.7% (down from 1.9%) in Ottawa-Gatineau and 0.9% in Toronto. Commercial building inflation rose by 1.2% in both regions (down from 2.7% in Ottawa). Industrial sector construction inflation rose by 1.0% in Toronto and 1.4% in Ottawa (down from 3.1%). All of the inflation readings for the non-residential sector were at their lowest since Q4 2020.
Residential sector construction inflation in the Ontario CMAs rose by its lowest since Q4 2019 (0.2%), and, when looking at all 11 CMAs, the lowest since Q2 2020 (0.5%). Ottawa even experienced a -0.2% quarterly change in the residential sector.
According to Statistics Canada, shortage of skilled labour, material availability, and high interest rates were notable factors impacting the construction sector.
Note: The 11 CMAs in this index are: St. Johns, Halifax, Moncton, Montreal, Ottawa-Gatineau (Ontario Part), Toronto, Winnipeg, Saskatoon, Calgary, Edmonton, Vancouver.
INDUSTRIAL PRODUCT AND RAW MATERIAL PRICE INDEX
Some of the factors leading to a low BCPI reading were lower material prices, as detailed below.
Decreasing Prices
Lumber and other wood products inflation continues to stay in the negative, at -13.8%. This marks the 12th consecutive decrease in year-over-year prices. Energy and petroleum product price inflation was -16.7% y/y, a large change compared to the negligible -0.8% from September. Fabricated metal and construction materials inflation was -1.7% y/y; this is the 8th consecutive drop in this category.
Slowing Prices
Plastic and rubber product inflation was almost flat at 0.6%. This is the lowest reading since early 2021.
Elevated Prices
Cement, glass, and other non-metallic mineral product inflation remains elevated, with annual price inflation at 9.7% (similar to the 10.0% in September). Packaging materials and containers inflation continues to rise, with a reading of 4.9% y/y in October (up from 3.8% y/y in September).
Note: some of the numbers reported in the last price index bulletin have changed due to revisions by Statistics Canada.
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FOR MORE INFORMATION, CONTACT:
Ali Ahmad
Research Analyst
Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210 ext. 222
aahmad@iciconstruction.com
