The COVID-19 pandemic has had an impact on the Consumer Price Index (CPI), both in terms of the shifts in consumer spending patterns and in terms of the special imputation treatments introduced to address missing or unavailable products and prices in 2020. Please refer to the note to readers for more information.
The CPI rose 0.7% in 2020 on an average annual basis, following an increase of 1.9% in 2019. In 2020, the CPI rose at the slowest pace since 2009, during the economic downturn. Slowing inflation was mostly attributable to a decline in consumer spending related to protective measures to restrict movement and encourage physical distancing during the pandemic. Excluding gasoline, the annual average CPI rose 1.3% in 2020.
Despite food prices increasing, prices for non-durable goods declined because of falling gasoline prices, which were the largest contributor to the slowdown in CPI growth in 2020. Prices for semi-durable goods also decreased, mostly as a result of falling prices for clothing and footwear.
Conversely, the annual average price increase for durable goods (+1.4%) was similar to the gain in 2019 (+1.3%), and this contrasts with the last major economic downturn, with prices for durable goods falling 3.1% in 2009. The difference between durable goods prices in 2020 and 2009 was largely attributable to passenger vehicles. In 2020, a sharp drop in vehicle sales at the onset of the pandemic coincided with weaker price growth, but this had a muted impact on the annual average price movement as sales bounced back to pre-pandemic levels by August. In 2009, although the decline in passenger vehicle sales was more gradual and less pronounced than during the pandemic, sales remained low for longer. This weighed down on annual average prices for durable goods.
Prices for services rose in 2020 (+1.4%), albeit at a slower pace than in 2019 (+2.3%). Service prices in 2020 were weighed down by prices for traveller accommodation, as demand for travel was heavily impacted by conditions related to COVID-19 and Canadians opted to stay closer to home. At the same time, consumers paid more for passenger vehicle insurance premiums (+6.0%) and rent (+1.7%) in 2020.