On a February morning, Statistics Canada reported that annual inflation had climbed to 5.1 per cent in January, the first time in more than three decades the national yearly rate has passed five per cent. It is a number that carries the weight of memory, pulling ordinary households back toward a kind of price pressure many had come to think belonged to another era. Housing, gasoline and groceries led the climb, and a conflict brewing far from Canadian shores helped set its pace. As the Bank of Canada prepares to meet, the country stands at the edge of a choice between holding its low rate stea
Canada's Annual Inflation Tops 5% for First Time in Over 30 Years, Driven by Housing, Gasoline and Groceries
The first time above five per cent in more than 30 years
On a February morning, Statistics Canada reported that annual inflation had climbed to 5.1 per cent in January, the first time in more than three decades the national yearly rate has passed five per cent. It is a number that carries the weight of memory, pulling ordinary households back toward a kind of price pressure many had come to think belonged to another era. Housing, gasoline and groceries led the climb, and a conflict brewing far from Canadian shores helped set its pace. As the Bank of Canada prepares to meet, the country stands at the edge of a choice between holding its low rate steady and beginning to lean against rising costs.
On Wednesday morning, Statistics Canada released a figure the country had not seen in more than thirty years: annual inflation of 5.1 per cent for January, up from 4.8 per cent in December. For the first time in that span, the yearly rate had climbed past five per cent.
Three areas drove the surge. Gasoline led, rising 31.7 per cent from a year earlier, a jump the agency linked to anxiety over global oil supplies and the threat of Russian action against Ukraine. Without gasoline, the rate would still have reached 4.3 per cent, the fastest pace on record for that measure. Groceries climbed 6.5 per cent, the largest annual increase since 2009, as beef, chicken, fish, margarine and condiments all became dearer, with shipping costs tangled in global supply chain snarls. Shelter costs rose 6.2 per cent, the quickest since 1990, lifted by new home prices and rents.
Royce Mendes of Desjardins expects inflation to keep accelerating as energy prices climb. The report arrived two weeks before the Bank of Canada's next rate decision. The bank has held its policy rate at 0.25 per cent since the pandemic began, but has recently abandoned its promise to keep it at emergency levels. Most expect a hike in March, likely the first of several.
The bank also watches core inflation, a steadier signal of underlying pressure. Its average reached 3.2 per cent in January, up from 2.93 per cent, the fastest since 1991. All eyes now turn to the March 2 decision.
On Wednesday morning, Statistics Canada released a number that hasn't appeared in the country's price data in more than three decades: annual inflation of 5.1 per cent for January. December's reading had been 4.8 per cent. It is the first time the yearly rate has climbed above five per cent in over 30 years.
Three categories did most of the work: housing, gasoline and groceries. Gasoline was the sharpest mover, up 31.7 per cent in January compared with the same month in 2021. The agency tied that jump to growing worry about global oil supplies, set against the threat of Russian military action against Ukraine. Strip gasoline out and the annual rate would still have been 4.3 per cent, which Statistics Canada notes is the fastest pace on record for that measure.
At the grocery store, prices rose 6.5 per cent year over year, the largest annual increase since May 2009. Beef, chicken and fish all climbed faster in January than they had in December. Margarine and condiments were up by double digits compared with January 2021. The agency attributed the higher food costs to rising shipping costs stemming from global supply chain problems.
Shelter costs rose 6.2 per cent from a year earlier, the quickest pace since February 1990. Statistics Canada pointed to higher prices for new homes as well as rent increases.
Royce Mendes, managing director and head of macro strategy at Desjardins, said inflation is set to accelerate further as energy prices keep rising.
The timing matters. The report 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 rates at the March announcement, probably the first of several increases this year aimed at cooling inflation.
The bank also watches core inflation closely, since it is considered a better gauge of underlying price pressure. The average of the three core measures was 3.2 per cent in January, up from 2.93 per cent in December. Statistics Canada says that is the fastest pace since August 1991. The March 2 rate decision is the next test of how the bank will respond.
Citations marquantes
Inflation is set to accelerate even further with energy prices continuing to rise.— Royce Mendes, managing director and head of macro strategy, Desjardins
Envie de l'histoire complète ?
Lire l'original sur BradfordToday ↗
War & Conflict