[embedded content]
Inflation has hit its highest level in three decades, reaching 5.1 per cent last month.
That means Canadians are paying more for just about everything, with the federal food inflation rate at 6.5 per cent — the biggest year-over-year increase in more than a decade.
That is starting to impact things at the Central Okanagan Food Bank.
“We are seeing a 10 per cent increase in food costs. In the last quarter we have seen a 22 per cent increase in visits to the food bank. Typically in January and February it is lower, but they have remained high which is a concern to us,” said food bank CEO Trevor Moss.
“The other thing we are hearing from our clients is we are trying to give them more food when they come each visit, simply because their struggles are real,” Moss added.
Associate professor of economics at UBCO Okanagan, Ross Hickey, says a large part of the rise in inflation is due to the role of monetary policy — rock-bottom interest rates — and supply chain issues.
“With interest rates being as low as they have been for as long as they have been, we can’t really rule out the role that monetary policy has here. It seems to me that it is not just some prices going up. Prices seem to be going up for a lot of different items, goods and services. So that may be determined by monetary policy,” he said.
A recent Ipsos poll showed the vast majority (82 per cent) of Canadians expect their financial situation to be negatively impacted in some way by inflation.
The poll also found that 15 per cent of Canadians say they won’t be able to afford necessities such as groceries, medicine, and gas, and 29 per cent would need to cut back on these essentials if the inflation rate continues to rise.
According to Statistics Canada, the price of beef soared 13 per cent compared with a year ago while chicken was up nine per cent and fish increased 7.9 per cent.
“If it is sustained at this rate, that just provides uncertainty for people trying to forward contracts into the future. It also eats away at the purchasing power of consumers particularly those who are on a fixed income,” Hickey said.
Hickey suggested that for inflation to fall back to the target two per cent a year, an increase in interest rates is needed.
“I don’t think we can go another quarter with inflation outside of the mandated window of two per cent… so I think that the Bank of Canada is going to be forced to act if prices continue to go up. It seems that there is enough pressure out there and enough money circulating the economy that prices will continue to go up.”
“I think we will see the Bank of Canada increasing interest rates within the quarter,” Hickey added.
The Bank of Canada has said as much.
The central bank has kept its key policy rate at 0.25 per cent since the onset of the COVID-19 pandemic in March 2020, but recently dropped its promise to hold the rate at emergency levels.
The bank is widely expected to raise rates as part of the March announcement in what’s likely the first of several hikes over the course of the year designed to cool inflation.
-with files from The Canadian Press
