This article studies why the same Bank of Canada tightening is reflected differently in provincial CPI inflation. It combines monthly provincial data from January 1991 to December 2024 with interacted local projections and public-data measures of common national monetary movements. The design estimates reduced-form provincial loadings in a common monetary environment, rather than structural responses to a single externally identified surprise. The main result is a housing-sensitive gap between headline inflation and inflation excluding shelter. Provinces with larger shelter weights and higher household debt–service exposure show a stronger headline response than non-shelter response after a common tightening. The evidence does not reduce to rent or to basket arithmetic alone: debt–service exposure is the more stable standalone component, while shelter weights tie the differential to measured CPI. Outside shelter, no single provincial characteristic dominates. Internal trade integration is associated with smaller baseline deviations from the national non-shelter response, but energy-related provincial composition is at least as informative in the competing-factor specifications. The paper therefore identifies shelter and household debt as the clearest sources of provincial incidence under one policy rate, while treating non-housing deviations from the national response as a broader provincial-structure result.
Constantin Colonescu (Thu,) studied this question.