Alberta inflation rate spikes as carbon tax helps drive up gas prices, Statistics Canada says

The inflation rate has risen to 2.5 per cent year over year in Alberta — driven largely by soaring gas prices that can be attributed in part to the province's new carbon tax, Statistics Canada says.

Gas prices leaped by 33.9% in Alberta in 12 months ending in January

Alberta's new 4.49 cents-per-litre carbon levy helped push up the cost of living by 2.5 per cent in the province. (CBC)

The annual inflation rate has climbed to 2.5 per cent in Alberta — driven largely by soaring gas prices that can be attributed in part to the province's new carbon tax, Statistics Canada says.

The climb in the consumer price index year-over-year in January, compares to a more modest one per cent jump recorded in December, according to the CPI January 2017 report released Friday.

Gas prices have leaped by 33.9 per cent in Alberta in the 12 months ending in January — including a 7.9 per cent jump in December.

The increase was partly due to the 4.49 cents-per-litre carbon levy that Rachel Notley's NDP government introduced on Jan. 1, 2017, the federal agency said in its report.

In Calgary, the price of regular gasoline from a self-serve filling station climbed by more than 12 per cent — nearly 12 cents a litre — in a month.

It went from an average of 94.9 cents a litre in December to 106.8 cents a litre in January.

In Edmonton, it climbed by 11.2 cents a litre, from 89.7 in December to 100.9 in January.

Shutdowns late last year at refineries in Illinois and Indiana have also been linked to rising gas prices. 

Natural gas prices spike by 42.3%

Natural gas prices spiked by 42.3 per cent year over year in January, also driven in part by the carbon tax, Statistics Canada said.

Todd Hirsch, chief economist at ATB Financial, says the uptick in Alberta's inflation rate isn't worth getting excited about. 

"The inflation increase was driven by two commodities in the basket of goods and services — that is gasoline and natural gas [for home heating]. Those commodities tend to be very, very volatile month over month," he said. 

The cost of rent was flat on a monthly basis in January, but consumers paid 1.9 per cent less on a year-over-year basis — the largest decline among the provinces.

Shelter costs rose by 2.4 per cent across Canada.

From January 2016 to January 2017, the electricity index declined by 8.2 per cent, more in Alberta than at the national level.

National inflation rate jumps to 2.1%

Nationally, the cost of living rose by 2.1 per cent in January, compared to 1.5 per cent the previous month.

A 6.3 per cent increase in transportation costs was the main contributor to the higher national inflation rate, with gas prices going up 20.6 per cent across the country, compared to the year before.

That increase coincided with the implementation of new carbon levies in Ontario and Alberta.

Excluding gasoline costs, the national inflation rate in January was 1.5 per cent.

Of the eight parts of the consumer economy that Statistics Canada tracks, only one got cheaper: consumers paid 2.1 per cent less for food in January than they did a year earlier, the fourth consecutive monthly decline.

Alberta's cost of living increased 2.5 per cent in January 2017 on a year-over-year basis, compared to one per cent in December, Statistics Canada says. (Statistics Canada )

With files from The Canadian Press