Canada’s inflation rate rose to a new multi-decade high of 5.7 per cent last month, as the price of everything from gasoline to groceries to shelter rose swiftly.
Canada’s inflation rate rose to a new multi-decade high of 5.7 per cent last month, as the price of everything from gasoline to groceries to shelter rose swiftly.
Statistics Canada reported Wednesday that the inflation rate was the highest it’s beensince August of 1991. It’s up from January’s level of 5.1 per cent, and even higher than the 5.5. per cent that economists polled by Bloomberg were expecting.
“If it feels like everything is getting more expensive, it’s because it is,” economist Royce Mendes with Montreal-based financial services firm Desjardins said of the numbers.
Energy prices were a major factor in the increase, as the ongoing crisis in Ukraine started ratcheting up prices during the month and into the next. Retail gasoline prices jumped by 6.9 per cent in the month of February alone, and were up by almost a third compared to the same period last year.
The data agency cited “geopolitical conflict in Eastern Europe and the Middle East” for the higher pump prices, “as uncertainty surrounding global oil supply put upward pressure on prices.”
But the inflation numbers released Wednesday don’t even include the spike observed in early March, when oil briefly topped $130 a barrel.
“Gasoline’s rise of 32.3 per cent is alarming given the further pressures on prices at the pump in early March,” Jay Zhao-Murray with foreign exchange firm Monex Canada said. “With such a dramatic increase, gasoline prices are likely to destroy demand.”
Food inflation speeding up
Prices at the grocery store were another major factor, as food purchased at stores got 7.4 per cent more expensive in the past year. That’s the fastest pace of gain for that category since 2009.
The price of baked goods are seeing increased scrutiny right now, because the ongoing conflict in Ukraine has cast the wheat crop from both countries into doubt. Russia and Ukraine together make up almost 30 per cent of the world’s supply of wheat.
Canada is also a major supplier or wheat, and while the country’s crop has not been impacted by the war, it has problems of its own. Drought conditions across the Prairies last year made Canada’s wheat crop smaller than it would normally be, which drove up prices for what’s available even before the current mess.
Louis Bontorin, co-owner of Calgary Italian Bakery, says that higher costs for his core ingredient today comes on the heels of last year, when prices already spiked by more than a third.
And wheat isn’t his only cost that’s rising. The cost of everything from yeast to vinegar and even packaging materials like cardboard boxes and bags are up by double digits. “It’s not just one thing. If it was one thing it would be manageable,” he told CBC News in an interview. “It’s like treading water trying to see which wave will hit you next.”
The 60-year-old family run bakery produces 2,000 loaves of bread an hour, but they don’t sell to the public directly. He has attempted to pass on some modest price increases to his buyers where possible, but they have problems of their own and are “more defensive” to the idea of passing those costs on to the end consumer in the store.
“We’re trying to manage into the future and you don’t even know what the future holds,” he said.
Putting food on the table isn’t the only thing getting pricier. Keeping a roof over one’s head is also becoming more difficult, with shelter costs going up by 6.6 per cent in the past year. That’s the fastest pace of increase since 1983.
“Rents initially moderated notably in the first year of the pandemic, but have come roaring back in the past year,” Bank of Montreal economist Doug Porter said.
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On the bright side, the numbers show a small number of services got cheaper in the past year. Prices for telephone services fell by 7.9 per cent in the year up to February. The main reason for the drop was a move in 2021 by various cellular companies to offer bonus data at no additional charge.
But that price drop came in February 2021, which means it will no longer be a factor in the annual comparisons from now on.
And prices for child care and housekeeping services are getting cheaper, at least in some parts of the country. They fell by 32.8 per cent month over month in Saskatchewan and 18.2 per cent in Newfoundland and Labrador following the introduction of new child care grants.