B.C. consumer price inflation fell in January to 2.2 per cent year over year, down from 2.6 per cent in the prior month, as the GST-tax holiday benefited households. Core inflation, which excludes food and energy, also fell from 3.2 per cent to 2.3 per cent.
Elevated shelter prices continued to keep headline inflation elevated. Year-over-year shelter prices rose by 4.1 per cent. Transportation prices increased by 4.5 per cent, up from 2.1 per cent. Gasoline prices were up 8.7 per cent, which is the first time that the year-over-year price has increased since May 2024. Energy prices matched that growth, up 8.9 per cent.
Food prices increased marginally, rising 0.3 per cent year over year. Ottawa’s temporary GST break contributed to the significant deceleration in price growth, benefiting restaurant meals. It also supported alcoholic beverage, tobacco product and recreational cannabis prices, which rose by just 0.1 per cent.
Overall goods prices still rose by 1.5 per cent, and the cost of services grew 2.7 per cent. This was the lowest year-over-year price growth in services in over three years.
Prices for items related to clothing and footwear continue to see year-over-year declines, coming in at negative two per cent in January of this year. This product group has seen year-over-year declines every month since January 2024.
Fresh fruit and vegetable prices rose by 2.5 per cent.
Meanwhile, home purchases fell in January to a seasonally adjusted 6,611 units across the province. MLS home sales were 3.8-per-cent lower than the previous month and followed a 0.9-per-cent dip in December. Although a series of interest rate cuts have incentivized sales, buyers remain cautious as broader economic uncertainty and tariff threats dampen consumer confidence.
Sales decreased in most B.C. regions. Driving the provincial decline was a 3.9-per-cent decrease in home purchases in the Greater Vancouver region. On Vancouver Island (excluding Victoria), sales decreased by 1.8 per cent, and they fell in the Okanagan-Mainline region by five per cent. The largest pullback was seen in Kamloops, with a 25.2-per-cent reduction in monthly sales. That said, notable gains were recorded in Chilliwack (up 10.3 per cent), Kootenay (up 6.1 per cent) and South Okanagan (up 3.4 per cent).
The average home price in B.C. fell substantially by 4.4 per cent to $970,000. This was the largest monthly drop since May 2022, and prices now sit 9.7-per-cent below the historical peak in February 2022. This monthly price decrease was likely driven by a leap in the supply of new residential listings (up 29.4 per cent) at the same time as demand retreated. The substantial gain in listings may point to sellers aiming to test the typically busier spring market. The completion of new projects also supported higher listings. Given the surge in supply with tempered demand, market conditions shifted in favour of buyers with a sales-to-new listings ratio of 38.1 per cent, down 51.2 per cent.
Regionally, lower prices were recorded in Greater Vancouver (down 4.4 per cent), Chilliwack (down 5.2 per cent) and the Kootenays (down 3.7 per cent). Prices rose in South-Okanagan (up 7.7 per cent), Vancouver Island excluding Victoria (up one per cent) and Victoria (up 2.4 per cent). They were relatively unchanged in the Okanagan-Mainline.
Average prices can mask compositional sales effects and the benchmark price index, which accounts for home attributes and product composition, fell in January by 0.2 per cent. In the Lower Mainland, they decreased by 0.4 per cent, but rose by 0.9 per cent in the Okanagan and by 0.1 per cent on Vancouver Island.
In the coming months, we expect a rise in housing activity due to lower interest rates and federal government policies that support the availability of financing. However, potential downside risks include consequential layoffs from a recession due to trade disruption, which would temper the economy and, indirectly, the housing market.
Bryan Yu is chief economist at Central 1.
