Inflation Update: What It Means for British Columbians and the Real Estate Market
Canada’s latest inflation numbers are in — and while May didn’t bring another shock, concerns remain. The Consumer Price Index (CPI) rose 1.7% year-over-year, matching April’s pace. While that’s a far cry from the 2022 highs, it’s still keeping the Bank of Canada on edge — and BC homeowners, buyers, and investors should take note.
A Cooling Trend — But With a Catch
May’s inflation data shows progress — especially in core inflation, which strips out volatile items like food and energy. All four core measures eased in May, with CPI excluding energy up 2.7%, down from 2.9% in April. This cooling trend was driven by:
- Lower rent price increases
- Declines in travel tour and air transportation prices
- Continued year-over-year drops in gasoline prices
The headline CPI rose 0.6% month-over-month, or 0.2% when seasonally adjusted, reinforcing that inflationary momentum has lost steam.
Rent and Shelter Costs: A BC-Specific Look
While Ontario led the national cooldown in rent growth — 3.0% in May vs. 5.4% in April — this doesn’t mean BC renters are off the hook.
In British Columbia, demand for rentals remains intense, especially in Vancouver, Burnaby, Coquitlam, and surrounding regions. Though nationally rent inflation slowed to 4.5% year-over-year, local markets like Greater Vancouver have seen less relief due to ongoing population growth, low vacancy rates, and limited housing supply.
The shelter component of CPI, which includes rent and mortgage interest, grew 3.0% year-over-year in May, slower than April’s 3.4%. Mortgage interest costs decelerated for the 21st consecutive month, rising 6.2% in May — yet this remains a major contributor to household expenses in BC, where home prices and borrowing costs remain high.
Gas and Travel: Relief at the Pumps, But For How Long?
BC residents saw some modest relief in energy prices. Gasoline prices dropped 15.5% year-over-year in May, following an 18.1% decline in April. These drops were largely due to the removal of the federal consumer carbon levy.
But it’s not all good news — gas prices rose 1.9% month-over-month in May, driven by higher refining costs and the seasonal switch to summer blends. This volatility reminds us that fuel prices in BC — often among the highest in Canada — remain vulnerable to both policy and global supply shifts.
New Car Prices and Electric Vehicles on the Rise
New passenger vehicle prices rose 4.9% year-over-year in May, a faster pace than April. The culprits? Higher costs for some electric vehicles (EVs) and a shift in consumer demand. BC has one of the highest EV adoption rates in Canada, so these price increases will be felt more acutely here.
What This Means for Interest Rates
May’s inflation report was a relief after April’s unsettling spike. With inflation easing and the labour market remaining soft, the Bank of Canada (BoC) is gaining room to maneuver. Sluggish retail sales and moderate domestic demand support the case for further rate cuts later in 2025.
The Bank has already acknowledged potential biases in its CPI-trimmed and CPI-median measures, hinting that inflation may be overstated. This could pave the way for two more rate cuts before year-end, barring any geopolitical or trade-related shocks.
Bottom Line for BC Buyers and Sellers
British Columbians — especially homeowners, investors, and those looking to upsize — should keep a close eye on these inflation trends. Slower inflation gives the BoC confidence to lower rates, which would support borrowing costs, mortgage affordability, and market activity in places like Burke Mountain, Heritage Mountain, and Westwood Plateau.
That said, real estate markets in BC remain tight, with strong demand and limited inventory in many areas. If you’re considering making a move this year, timing matters more than ever — and understanding macroeconomic trends can help you stay ahead of the curve.
