The cost of living continues to rise at the fastest pace in decades, with Canada’s official inflation rate rising at a 6.8 per cent annual pace in April, a new 31-year high.
Statistics Canada reported on Wednesday that the cost of living crept higher mainly because of increases in the cost of food and shelter. Food prices have risen by 9.7 per cent in the past year, while shelter costs are up by 7.4 per cent.
Global factors, including the war in Ukraine disrupting the price and supply of grains, as well as outbreaks of bird flu and extreme weather events in the United States, are combining to drive up the cost of meat and produce.
Among the increases:
- Fresh vegetables, up 8.2 per cent
- Fresh fruit, up 10 per cent
- Meat, up 10.1 per cent
- Bread, up 12.2 per cent
- Coffee, up 13.7 per cent
- Pasta, up 19.6 per cent.
“Rising food prices are a global issue, and we can directly correlate those increases to what’s happening in Ukraine,” economist Royce Mendes with financial services conglomerate Desjardins told CBC News in an interview on Wednesday.
“Food is shipped from all over the world to Canada,” Mendes said, “and our weakening dollar makes it more expensive to import.”
Gasoline has been a major driver of inflation of late, but pump prices actually fell by 0.7 per cent in April after spiking by more than 11 per cent the previous month. Compared to where they were a year ago, gas prices are still up by more than a third, however.
Economists had been expecting the overall inflation figure to ease slightly from March’s 6.7 per cent level, but instead it went slightly higher. That’s a troubling sign that inflation has yet to peak, even though it’s at its highest level since 1991.
The U.S. has also seen its inflation rate skyrocket in recent months, but numbers for April suggest that the wave may have crested there, with the official figure cooling to 8.3 per cent in April from 8.5 per cent in March.
“Core inflation has been accelerating in Canada for a few months now, in contrast to the U.S.,” Mendes said. “What went up still isn’t coming down in Canadian inflation, and might not any time soon.”
The high inflation number makes it even more likely that the Bank of Canada will hike its benchmark interest rate at its next policy meeting in early June.
