Economist explains why N.B. has highest inflation rate despite national drop

High powerrates and rent increases could be the cause of New Brunswick's July inflation rate the highest of all provincesaccording to Statistics Canadasays Pierre-Marcel Desjardins, a professor of economics at the Universit de Moncton.

Figures released this week showCanada's annual inflation rate dropped to 2.5 per cent in July down from 2.7 per cent in June.

But New Brunswick's rate sat at2.9 per cent.

Desjardins said increases in electricity rates here are higher than other provinces and there's an issue with residential housing.

"Not if you own your home we're actually essentially at the national average but if you rent, the increase over the past 12 months has been significantly higher than other provinces."

He pointed to the Higgs government's removal of the rent cap in New Brunswick as a contributor tothe increase in rents.

In response to cost of living concerns, the government implemented a one-year rent cap in 2022, which prevented landlords from raising rents by more than 3.8 per cent.

Desjardins said while other provinces kept similar policies in place, New Brunswick removed the rent cap, which could explain the difference.

At the same time though, capping rent increases unilaterally may have short-term success, he said, but heavy rent control could force potential investors to go elsewhere to build amid a need for new apartments.

The Statistics Canada numbers show some provinces, such as British Columbia, were close behind New Brunswick's July inflation rate at 2.8 per cent but others, such as Saskatchewan at 1.6, were much lower.

And Desjardins said that althoughthe national rate is trending down, consumers likely won't see a significant decrease in prices when it comes to the cost of living.

Still, the increases have significantly slowed down compared to two years ago.

"When inflation goes down, it's not negative, so prices are not going down," said Desjardins. "So, unfortunately, we will not see the level of prices that we saw three, four or five years ago."