March 28 2024: Investment off to a cool start in 2024; Ontario inflation pushes closer to 2% target

March 28, 2024

Total ICI building construction investment dropped 1.8% from December to January, mainly due to a -2.7% monthly change in the commercial sector. Industrial and institutional sector investment also saw small declines but were up compared to January 2023. Both headline and core CPI dropped below 3% in Ontario. The Industrial Product Price Index showed inflation declines in energy products, lumber products, fabricated metal products and construction materials, while rubber and plastic products inflation was flat.

Total ICI investment in building construction declined month-over-month (m/m) for the second month in a row in January (-1.8%), falling from $2.62 billion to $2.57 billion. This was largely due to a 2.7% m/m drop in the commercial sector ($1.32 billion to $1.29 billion). Commercial sector investment has been gradually decreasing since July 2023 and was also down 2.6% versus January 2023. Industrial building investment was down 1.9% compared to December ($641.6 million to $629.7 millions), but still up 17.5% y/y. Institutional sector investment was relatively stable with only a 0.2% m/m decrease ($651.7 million to $650.8 million), and was up a significant 28.4% y/y.

Ontario’s headline inflation dropped from 2.7% y/y in January to 2.4% y/y in February. Inflation excluding food and energy dropped from 3.2% to 2.7%. This is the first time in over 2 years that this measure of core inflation has dropped below 3%. This was mainly due to lower goods inflation, which dropped from 1.4% to 0.9%. Services price inflation remained at 3.8%.

Note: Inflation excluding food and energy, or “core” inflation is often of interest since food and energy prices tend to be volatile and may not represent average underlying prices trends.

Decreasing Prices

Energy and petroleum product prices fell on a year-over-year basis for the 12th straight month in February, with inflation at -6.3% (-15.7% y/y in January). Lumber and other wood products prices were down 2.6% y/y and while y/y inflation has been down for over a year, recent decreases have been much smaller than a year ago when it was almost -40% y/y. Fabricated metal products and construction materials were down marginally (-1.3% y/y) rounding out a 12-month streak of similar sized drops in annual inflation. Packaging material and containers inflation fell from 1.3 y/y to -0.2% y/y.

Slowing Prices
Plastic and rubber products inflation was flat, a drop compared to the 1.8% y/y from January.

Accelerating Prices
Cement, glass, and other non-metallic mineral products inflation rose to 6.4% y/y, a slight increase from 5.8% in January.



Ali Ahmad
Research Analyst

Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210 ext. 222