Canada’s inflation rate is now at 5.7%, its highest level in 30 years

Canada’s inflation rate hit a new multi-decade high of 5.7% last month, as the price of everything from gas to groceries to housing rose rapidly.

Statistics Canada reported Wednesday that the inflation rate was the highest since August 1991. It is up from January’s level of 5.1%, and even above 5.5%. percent than economists polled by Bloomberg expected.

“If it feels like everything is getting more expensive, that’s because it is,” economist Royce Mendes of Montreal-based financial services firm Desjardins said of the numbers.

Energy prices were a major contributor to the increase as the ongoing crisis in Ukraine began to push prices higher in the month and into the following month. Retail gasoline prices jumped 6.9% in February alone and were up nearly a third from the same period last year.

The data agency cited “geopolitical conflict in Eastern Europe and the Middle East” for the rise in pump prices, “as uncertainty surrounding global oil supplies put pressure on the price increase”.

But the inflation figures released Wednesday do not even include the spike seen in early March, when oil briefly rose above $130 a barrel.

“Gasoline’s 32.3% rise is alarming given renewed pressures on pump prices in early March,” said Jay Zhao-Murray of exchange firm Monex Canada. “With such a dramatic increase, gasoline prices risk destroying demand.”

Food inflation is accelerating

Grocery prices were another big factor, as food bought in stores cost 7.4% more over the past year. This is the fastest growth rate for this category since 2009.

The price of baked goods is under increased scrutiny at the moment, as the ongoing conflict in Ukraine has put the wheat harvest in both countries in doubt. Russia and Ukraine together account for almost 30% of the world’s wheat supply.

Louis Bontorin, co-owner of Calgary Italian Bakery, says wheat isn’t the only thing his company’s price has risen in recent times. (Dave Rae/CBC)

Canada is also a major supplier of wheat, and although the country’s crop was unaffected by the war, it has its own problems. Drought conditions on the Prairies last year reduced Canada’s wheat crop from what it normally would be, pushing up prices for what’s available even before the current mess.

Louis Bontorin, co-owner of Calgary Italian Bakery, says the rise in costs for his staple ingredient today follows last year, when prices had already soared by more than a third.

And wheat isn’t its only rising cost. The cost of everything from yeast to vinegar and even packaging materials like boxes and cardboard bags has increased 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 walking on water trying to see which wave hits you next.”

The 60-year-old family bakery produces 2,000 loaves of bread per hour, but does not sell directly to the public. It has tried to pass on some modest price increases to its shoppers where possible, but they have their own issues and are “more defensive” about passing those costs on to the store’s end consumer.

“We’re trying to manage the future and you don’t even know what the future holds,” he said.

Putting food on the table isn’t the only thing that costs more. Keeping a roof over your head is also getting tougher, with housing costs rising 6.6% over the past year. This is the fastest growth since 1983.

“Rents initially moderated especially in the first year of the pandemic, but have come back strong in the past year,” said Doug Porter, an economist at Bank of Montreal.

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On the positive side, the numbers show that a small number of services have become cheaper over the past year. Prices for telephone services fell 7.9% in the year to February. The main reason for the drop was a decision made in 2021 by various mobile companies to offer bonus data at no additional cost.

But that price drop came in February 2021, meaning it won’t be a factor in year-to-year comparisons from now on.

And prices for childcare and housekeeping services are getting cheaper, at least in some parts of the country. They were down 32.8% month over month in Saskatchewan and 18.2% in Newfoundland and Labrador following the introduction of new child care subsidies.

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