In mid-February 2022, Statistics Canada reported that the country's annual inflation rate had climbed to 5.1 per cent in January, the first time in more than three decades it has crossed the five per cent line. The rise reflects a familiar human experience made visible in numbers: the cost of getting around, feeding a family, and keeping a roof overhead all grew at once, with fuel prices unsettled by fears of conflict over Ukraine and supply chains still strained by the long aftershocks of the pandemic. Households felt it first, and the central bank now stands at a threshold, weighing whether
Canada's Annual Inflation Hits 5.1 Per Cent in January, First Time Above Five in Over 30 Years
The first time above five per cent in more than 30 years
Mark
Five point one per cent. Why does the thirty-year mark matter?
Mimi
Because it tells you this isn't a blip people can wave off. January's number is the highest since before 1992, and it rose from 4.8 in December.
Luke
Worth noting the thirty-year line applies to the headline rate. Other records in the report are measured differently, some going back to 1990 or 1991, some to 2009.
Mark
Gasoline is up 31.7 per cent. Is that the whole story?
Mimi
No. Without gasoline the rate would still be 4.3 per cent, which Statistics Canada says is the fastest on record for that measure.
Luke
And the link to Russia and Ukraine is described as a backdrop of concern over supply, not a proven cause of that year-over-year jump.
Mark
What about groceries and housing?
Mimi
Groceries rose 6.5 per cent, the most since May 2009, with shipping costs blamed. Shelter rose 6.2 per cent, the fastest since February 1990, from new home prices and rents.
Mark
And the Bank of Canada?
Mimi
It's held at 0.25 per cent since March 2020 and is widely expected to hike in March.
Luke
Expected, not announced. How many hikes and how big isn't in this reporting. Mendes's view that inflation will accelerate is one economist's forecast, not a confirmed outcome.
El Pulso
- Annual inflation jumped to 5.1 per cent in January, the first time above five per cent in over thirty years, and the figure landed on households already stretched thin.
- Gasoline prices surged 31.7 per cent in a single year, pushed by anxiety over global oil supply as tensions with Russia over Ukraine tightened markets.
- Groceries rose 6.5 per cent and shelter costs 6.2 per cent, the sharpest climbs in decades, squeezing budgets on both the checkout line and the rent cheque.
- The Bank of Canada, which has held its policy rate at 0.25 per cent since March 2020, faces a decision in two weeks, with a first hike widely expected and more likely to follow.
In mid-February 2022, Statistics Canada reported that the country's annual inflation rate had climbed to 5.1 per cent in January, the first time in more than three decades it has crossed the five per cent line. The rise reflects a familiar human experience made visible in numbers: the cost of getting around, feeding a family, and keeping a roof overhead all grew at once, with fuel prices unsettled by fears of conflict over Ukraine and supply chains still strained by the long aftershocks of the pandemic. Households felt it first, and the central bank now stands at a threshold, weighing whether its long pause on interest rates must finally give way.
On a Wednesday morning in February 2022, Statistics Canada released a number that many Canadians had already been living through at the gas pump and the grocery till. Annual inflation had reached 5.1 per cent in January, up from 4.8 per cent in December, and for the first time in more than thirty years it sat above five per cent.
Three areas carried most of the weight. Gasoline led the climb, with pump prices up 31.7 per cent from a year earlier, as worry over global oil supplies grew with the threat of Russian military action against Ukraine. Groceries followed, with food prices up 6.5 per cent, the largest annual gain since 2009, as higher shipping costs from snarled global supply chains worked their way onto shelves. Shelter rose 6.2 per cent, the fastest since 1990, driven by pricier new homes and rising rents.
Economists expected the pressure to continue. Desjardins's Royce Mendes said inflation would keep accelerating as energy prices climbed.
The timing carried its own weight. The Bank of Canada, which had kept its key rate at 0.25 per cent since the pandemic began, was due to announce its next decision two weeks later, and a first increase was widely anticipated, likely the start of several aimed at cooling prices. Core inflation, which the bank watches closely, also rose to an average of 3.2 per cent, its fastest pace since 1991. The coming announcement was now the marker everyone was watching.
On Wednesday morning, Statistics Canada put a number on what many households had been feeling at the pump and the checkout: the annual inflation rate reached 5.1 per cent in January. It is the first time in more than 30 years that the figure has climbed above five per cent. December's reading had been 4.8 per cent.
Three categories did most of the work: housing, gasoline and groceries. Gasoline was the most dramatic. Prices at the pump were up 31.7 per cent from January 2021, against a backdrop of rising worry over global oil supplies tied to the threat of Russian military action against Ukraine. Strip gasoline out, Statistics Canada said, and the annual rate would still have been 4.3 per cent. The agency noted that this would be the fastest pace on record for that measure.
Grocery bills told a similar story. Food prices rose 6.5 per cent over the year, the largest annual increase since May 2009. Beef, chicken and fish all climbed faster in January than they had in December, while margarine and condiments were up by double digits compared with a year earlier. The agency tied the higher food costs to rising shipping expenses stemming from global supply chain problems.
Shelter costs rose 6.2 per cent year over year, the quickest pace since February 1990. Statistics Canada pointed to higher prices for new homes and to rent increases as the drivers.
Looking ahead, Royce Mendes, managing director and head of macro strategy at Desjardins, said inflation is set to accelerate further as energy prices keep rising.
The release landed exactly two weeks before the Bank of Canada's next scheduled interest rate announcement. The central bank has held its key policy rate at 0.25 per cent since the pandemic began in March 2020, though it recently dropped its promise to keep the rate at emergency levels. The bank is widely expected to raise the rate in March, likely the first of several increases this year aimed at cooling inflation.
The bank also watches measures of underlying price pressure closely. The average of its three core inflation measures was 3.2 per cent in January, up from 2.93 per cent in December. Statistics Canada said that was the fastest pace since August 1991.
The next marker is the Bank of Canada's announcement in two weeks, when the first rate increase of the pandemic era is widely anticipated.
Citas Notables
Inflation is set to accelerate even further as energy prices continue to rise.— Royce Mendes, managing director and head of macro strategy at Desjardins (paraphrased)
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