Two provinces are still prospering from cutting taxes on fuel, as inflation in Saskatchewan and Manitoba rose at half the rate as the rest of the country.
While inflation in Canada rose 2.9% between May 2023 and May 2024, inflation in Manitoba grew by 1.3% and by 1.5% in Saskatchewan. No other provinces saw their consumer price index increase less than 2.6%, according to Statistics Canada’s most recent data.
The province where inflation rose the most was Nova Scotia, which saw its CPI increase by 3.7% between May 2023 and May 2024.
CPI measures price changes as seen by Canadian consumers.
Saskatchewan attributed its inflation rate – the second-lowest in the country – to its removal of the carbon tax.
“Our government will continue to stand up for Saskatchewan with the elimination of the carbon tax on home heating as a significant measure in the fight to tackle inflation,” said Saskatchewan Minister of Trade Jeremy Harrison. “The federal carbon tax negatively impacts the interests of this province and the people who live here. Our priority will always be the defence of our economic well-being against the out-of-touch federal Liberal/NDP coalition government.”
The only province that saw inflation increase more slowly than Saskatchewan was Manitoba.
They started to see the tax cuts limiting the effects of inflation earlier this year. Inflation in the two provinces fell more quickly than the rest of the country after Saskatchewan ceased collecting its carbon levy and Manitoba paused its fuel tax.
Manitoba had the lowest inflation in the country for the fifth month in a row.
“Our government took action right away to lower costs for families by cutting the 14-cents-a-litre gas tax, putting money back in your pocket and lowering overall inflation in Manitoba,” said Manitoba Finance Minister Adrien Sala.
The Manitoba Bureau of Statistics estimates that the fuel tax pause has contributed to decreasing inflation by 0.4%. The tax pause on gas also contributes to lower inflation on food and anything else shipped with gas.
The Bank of Canada previously claimed that removing the carbon tax would cause inflation to decrease by 0.15 points. The governor of the Bank of Canada, Tiff Macklem, later updated that figure to 0.6 percentage points. The updated calculation was still criticized for not considering second-round or pass-through effects from the supply chain.
The Canadian Taxpayers Federation previously applauded Manitoba for pausing its fuel tax, while Alberta Premier Danielle Smith took some flack for reintroducing the fuel tax in her province after Albertans had had a brief reprieve from it.
Inflation in Alberta rose 3% between May 2023 and May 2024.
Grocery prices experienced the largest month-over-month price increase since January 2023. Inflation of grocery prices rose for the first time since June 2023, as they had been steadily decreasing since. In June 2023, grocery prices had a CPI change of 9.1%, decreasing every month until May 2024, when they rose to 1.5% from April’s 1.4%.
