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What you need to know about inflation in Canada



What you need to know about inflation in Canada

The coronavirus pandemic contributed significantly to the current economic crisis in Canada. High inflation pushed companies out of business, and thousands of Canadians lost their jobs. However, the country’s economy recovered faster from the pandemic than many observers predicted.

The wage growth was back to the pre-pandemic level, and the unemployment rate by 2021 was at an all-time low. Unfortunately, a war broke out in Ukraine, reversing all the gains.

The inflation in Canada has constricted family budgets and increased business operational costs. Economic experts warn that the inflation in Canada may reach a self-sustaining level if the war in Ukraine doesn’t end soon enough. Canadians on fixed or low income are the worst hit by inflation.

You probably wonder what could have led to the high inflation in Canada despite a promising recovery from the pandemic. Here are three causes of the high inflation in the country.

What you need to know about inflation in Canada

  1. Soaring Prices Of Basic Commodities

The Bank of Canada has identified the excessive demand for products as the primary driving factor for the soaring inflation. There’s a high demand for essential food products from the international market. Canada depends on the global market for essential commodities such as gas and cooking oil. Ukraine is the primary exporter of corn and sunflower oil in the international market.

However, the ongoing war in Ukraine disrupted the supply chain of these basic commodities. The disruption led to an increase in demand and price.

Canadians have contributed to inflation by purchasing highly-priced basic commodities. Sadly, inflation becomes ingrained when it feeds on itself; this is the situation in the country. The price of essential commodities increases because of the rising manufacturing and supply chain costs.

The Bank of Canada must take proactive steps before inflation becomes self-fulfilling. Businesses and households expect the prices of commodities to keep soaring. And they behave accordingly.

  1. Disruptions In The Global Supply Chain

Global economies thrive through interdependency. But the coronavirus pandemic disrupted the global supply chain. In response, the demand for essential products soared. The unpredictable global marketplace caused the high demand, and Canadians responded by increasing their spending on basic commodities.

Similarly, companies used debt to secure enough raw materials from global suppliers. The war in Ukraine exacerbated the demand for products in the international market. Low demand for the Canadian dollar in foreign exchange further increased inflation. Since domestic markets lack direct control over internationally traded goods, inflation in Canada became inevitable.

  1. The Need To Balance Trade-Offs

When inflation increased in 2021, the Bank of Canada decided to raise the interest rate for a short duration. This strategy cushioned the country from inflation shocks across the border. The principle behind it was that international inflation would subside over time. However, this was a short-term solution designed to weigh in on trade-offs.

Apart from absorbing global shock, the Bank of Canada hoped the monetary policy would restore jobs lost during the pandemic.

Unfortunately, disruptions in the supply chain and the war in Ukraine have lasted longer than expected. No one knows when the war in Ukraine will end; therefore, the global supply chain remains unpredictable.

Intervention Strategy

According to the Bank of Canada, the inflation may be too high but hasn’t reached the self-fulfilling stage. Therefore, it’s easier to bring it down at this stage before it peaks at an unsustainable level. The Bank of Canada has responded to frenzy spending by increasing lending rates in March 2022. It has increased the interest rates to curb inflation in four ways:

  • Discourage borrowing: The move will prevent Canadians from excessive and uninformed spending behaviour.
  • Encourage saving: The high-interest rates will encourage Canadians to save their money, thus stabilizing inflation and stimulating economic growth.
  • Increase the value of the Canadian dollar: The move will help reduce the demand for the American dollar in the country which is required for international purchasing.
  • Reduce the demand for products and services: The demand for goods and services is responsible for inflation in Canada. The Bank of Canada hopes to minimize the demand for goods by reducing the currency in circulation


The war in Ukraine is primarily responsible for Canada’s current inflation. Unfortunately, cross-border wars are unpredictable. There’s no way to predict when the war will end. Therefore, it’s difficult to tell when Ukraine shall recover from the war and stabilize its trade activities with Canada.

However, the Bank of Canada can take several proactive measures to minimize inflation before it peaks at an entrenched level. There could be risks of plunging the economy into depression. However, when monetary policies such as increasing the lending rates take effect, the Bank of Canada can tame inflation to manageable levels without hurting the economy.


Iran protests: Canada sanctioning 'morality police' – CTV News



Canada will be imposing new sanctions on Iran as a result of a continuing violent crackdown on protesters, Prime Minister Justin Trudeau said Monday.

The sanctions will be levelled on “dozens of individuals and entities, including Iran’s so-called morality police,” the prime minister said.

“We’ve seen Iran disregarding human rights time and time again, and now we see with the death of Mahsa Amini and the crackdown on protests,” Trudeau said, referencing the death of a 22-year-old who was detained for allegedly violating the country’s forced veiling laws. Her death has sparked outrage and has prompted a wave of international demonstrations, seeing some women cut their hair or burn their hijabs in revolt.

“To the women in Iran who are protesting and to those who are supporting you, we stand with you. We join our voices, the voices of all Canadians, to the millions of people around the world demanding that the Iranian government listen to their people, end their repression of freedoms and rights, and let women and all Iranians live their lives and express themselves peacefully,” Trudeau said.

While no official notice of the new sanctions has been published by Global Affairs Canada, the prime minister noted they come in addition to outstanding measures Canada has taken against Iran.

In an email to CTV News, Adrien Blanchard, press secretary to Foreign Affairs Minister Melanie Joly said that Trudeau “announced Canada’s intention” to issue these sanctions, pledging more details “in due course.” 

Joly, as well as MPs from all parties, have spoken out about the escalating tensions and use of force against civilians in Iran, with the House of Commons unanimously passing a motion last week offering “solidarity to the women of Iran who are fighting for their rights and freedoms.”

With files from CTV News’ Michael Lee 

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Maine power workers cross border without incident to help in Nova Scotia



OTTAWA — Nova Scotia Power says there were no issues delaying American power crews from crossing the border to help repair the electrical grid from the devastation of hurricane Fiona.

On Sunday, the utility company and Nova Scotia Premier Tim Houston had both said an issue related to the controversial ArriveCan app was delaying power crews from crossing into Canada.

Health Minister Jean-Yves Duclos said this morning that the order making the app mandatory and requiring that foreign citizens be vaccinated to come to Canada will expire on Friday.

Power crews helping to restore electricity are considered essential workers and are exempt from the border measures.

In a new statement Monday afternoon, Nova Scotia Power spokeswoman Jacqueline Foster says there was some confusion about the app but it is now confirmed there were no problems.

Versant Power says 15 line workers and two mechanics left Bangor, Maine, for Canada early Monday morning without issue, and Central Maine Power reports more than a dozen two-person crews and 10 support workers crossed the border without incident at around 7 a.m. Monday.

“We now know there were not any issues with ArriveCan,” said Foster. “Our contractor crews have made their way over the border and we are grateful to have them as part of our restoration efforts here in Nova Scotia.”

The Canada Border Services Agency reported that it cleared 19 power trucks at the Third Bridge border crossing in St. Stephen, N.B., just after 7 a.m. Monday. The CBSA said the average processing time was between 30 and 60 seconds per vehicle.

The ArriveCan app has been fodder for heated political debates for months and Conservatives have repeatedly demanded that the government shut it down.

During question period on Monday, Conservative Leader Pierre Poilievre cited the allegations that ArriveCan delayed power crews to demand that the app be scrapped ahead of schedule.

He asked, “Will the prime minister suspend the ArriveCan app today, not Saturday, so that no more holdups happen at the border for those who are trying to help those in desperate need?”

Trudeau said he can “confirm that there were no delays at any border because of ArriveCan or otherwise.”

The utility company had said Sunday that crews were physically stuck at the border, but confirmed a few hours after question period on Monday that this had never been the case.

Foster suggested the error was a result of “confusion” after a concern arose Friday — before the storm actually hit — that crews from Maine might not be able to cross the border because of ArriveCan.

No New Brunswick border crossings reported issues over the weekend.

This report by The Canadian Press was first published Sept. 26, 2022.


Mia Rabson, The Canadian Press


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Former top civil servant, medical association president appointed as senators



OTTAWA — Ian Shugart, a longtime bureaucrat and the country’s top civil servant during the first part of the COVID-19 pandemic, has been tapped for a seat in the Senate.

Dr. Gigi Osler, a Winnipeg surgeon, University of Manitoba professor and president of the Federation of Medical Women in Canada, is also set to become a senator.

Prime Minister Justin Trudeau announced the picks today after the two were recommended to him by the independent advisory board for appointments to the upper chamber.

Shugart, who will represent Ontario, stepped down as the clerk of the Privy Council in early 2021 to undergo cancer treatments and formally retired in May after a long public service career.

Trudeau also appointed him to the King’s Privy Council today, adding his name to a list that includes past and present cabinet ministers and people “honoured for their contributions to Canada,” according to the Prime Minister’s Office.

Osler, who will represent Manitoba, became the first female surgeon and the first racialized woman to hold the presidency at the Canadian Medical Association in 2018.

This report by The Canadian Press was first published Sept. 26, 2022.


The Canadian Press

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