Canada’s inflation rate rose to 6.7 per cent in March, far more than economists were expecting and a full percentage point higher than February’s already 30-year high.
Statistics Canada reported Wednesday that all eight categories of the economy that the data agency tracks rose, from food and energy to shelter costs and transportation.
“The spike in prices over the month of March is the largest monthly increase since January 1991, when the goods and services tax was introduced,” economist Royce Mendes of Desjardins Group noted.
While the cost of just about everything is going up fast, transportation costs are leading the way, up 11.2 per cent in the past year. A big reason for that increase is the 39.8 per cent rise in gasoline costs since March of last year.
Gasoline prices rocketed higher in March mostly due to Russia’s invasion of Ukraine throwing global supplies into chaos. Although they have since come down a little, at one point last month numerous Canadian cities saw their average price for a litre of gasoline hit $2 for the first time ever.
High gas prices have an outsized impact on overall inflation because the cost of shipping and transportation gets added to the cost of everything else, from grocery bills (up 8.7 per cent) to the price of durable goods like furniture (up by 13.7 per cent in the past year) and even plane tickets (up by 8.3 per cent.)
Prices for furniture jumped by more than eight per cent in the month of March alone. That’s the highest monthly increase in that category in more than 70 years.
‘Everything has gone up’
John Salgueiro, owner of JS Furniture in Winnipeg, has been in business since 1974 and said he’s “never ever seen a situation like this.”
“Everything has gone up , absolutely every single thing,” he said.
Higher gasoline prices have caused the price of freight for merchandise to skyrocket, which gets added to the price that consumers pay in store. (Darryl Dyck/Canadian Press)
A lot of what Salgueiro sells is imported, and the price of those goods has skyrocketed in the pandemic. A container from Asia that used to cost him $4,000 US will likely cost him $20,000 US today.
And that’s just the shipping costs. One of his biggest suppliers of bedroom sets just raised their price for the actual merchandise by 15 per cent overnight.
“From the merchandise costs to freight, it’s astronomical,” he said.
Grocery bills
Food prices in particular tend to raise the ire of consumers, since it is hard to avoid or lessen the impact of rising prices on something that is such a necessity. But Zainab Williams, a financial planner with Elleverity Wealth Management in Caledon, Ont., says there are ways.
“Meal prepping is your go-to friend right now,” she told CBC News in an interview. “You need to have a strategy to see what you can create with what you have in your pantry before replenishing.”
WATCH | Personal finance expert explains the impact of high inflation:
Answering your questions on rising inflation rates
7 hours ago
Duration 11:21
Zainab Williams of Elleverity Wealth Management answers viewer questions about how to deal with the rising prices of food, gasoline and other essentials. 11:21
She says many of her clients have started using various apps that help consumers save money while eating well by offering deep discounts on food that’s about to reach its best-before date.
“Families are doing a lot of financial acrobatics,” she said, “so in this environment, you have to think outside the box.”
Karen Peck from Toronto says she’s being choosier at the grocery store lately. “It’s tough for everybody right now,” she said. “For me personally, I cook a lot more at home.”
“Wherever you can save … a few dollars here and there, it’s what you can do.”
Services getting more expensive, too
While the cost of anything that needs to be transported is going up, the service sector isn’t immune to the current inflationary pressure.
The overall price for services has increased by 4.3 per cent in the past year, up from 3.8 in February. As TD Bank economist Leslie Preston noted, the main factor there wasn’t pump prices; it was the easing of COVID-related health restrictions pushing up demand for close-contact services like restaurant dining and other in-person events.
“Price pressures across other areas of the economy are showing more heat both for goods and services,” she said. “Inflation is likely to remain above the Bank of Canada’s target range until 2023, crimping consumer purchasing power and driving interest rates higher.”
WATCH | Here’s how consumers are making ends meet:
How are you fighting inflation?
6 hours ago
Duration 1:24
Canadians on the streets of Toronto tell the CBC about the changes they’re making to their household budgets to make ends meet right now. 1:24
While the vast majority of goods and services got more expensive, a few things have gotten cheaper, although by nowhere near enough to offset the rise everywhere else.
They include a 5.4 per cent decrease in the cost of servicing a mortgage, a 6.2 per cent decline in the cost of car insurance, a 2.5 per cent decrease in the cost of phone bills, and a large decline of 28 per cent in the costs of car registration fees.
But that decline was not felt evenly across the country. The main reason for that drop was the Ontario government’s decision to scrap the vehicle registration tax, Statistics Canada noted.
Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.
“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.
“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.
Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.
Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.
Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.
The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.
As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”
“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.
The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.
Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.
The recall has so far grounded six aircraft, Guérard said on the call.
“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”
Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.
“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.
“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.
“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.
This report by The Canadian Press was first published Sept. 12, 2024.
