In mid-February 2022, Statistics Canada reported that the country's annual inflation had climbed to 5.1 per cent in January, the first time in more than thirty years that the rate has passed five. Its rise was carried mostly by the cost of shelter, gasoline and groceries, the everyday expenses that quietly shape how a household feels about the economy. Behind the numbers lies a familiar tension between a world recovering from a pandemic and a set of new anxieties over energy supplies and geopolitics, and the Bank of Canada now stands at the threshold where it must decide whether to begin lifti
Canada's Annual Inflation Tops 5% for First Time in Over 30 Years, Led by Housing, Gas and Groceries
The first time inflation has topped five per cent in more than three decades
Mark
Five point one per cent. Why is that number a milestone and not just another monthly reading?
Mimi
Because Canada hasn't seen annual inflation above five per cent in more than 30 years. It follows 4.8 per cent in December, so the climb is continuing.
Mark
What's behind it?
Mimi
Housing, gasoline and groceries. Gasoline is up 31.7 per cent from a year ago, groceries 6.5 per cent, and shelter 6.2 per cent, the fastest since February 1990.
Luke
Gasoline is tied to worries about Russia and Ukraine. Is that confirmed as the cause?
Mimi
The report describes it as the backdrop, with concerns over global oil supplies linked to the threat of Russian military action. It isn't presented as a measured cause.
Luke
And the claim that inflation will accelerate?
Mimi
That's Royce Mendes of Desjardins, a forecast and not a result. Statistics Canada hasn't said that.
Mark
What about the Bank of Canada?
Mimi
Its rate has been 0.25 per cent since March 2020. A hike in March is widely expected, but the bank hasn't announced one.
Luke
Worth remembering, then, that the rate hikes are an expectation. The 5.1 per cent is the only firm number here.
O Pulso
- Annual inflation jumped to 5.1 per cent, the first reading above five per cent in over thirty years, and the figure is climbing faster than many households expected.
- Gasoline prices surged 31.7 per cent year over year as fears over Russian threats against Ukraine rattled global oil markets.
- Grocery bills rose 6.5 per cent, the steepest annual climb since 2009, with beef, chicken, fish and condiments all pushing budgets tighter.
- Shelter costs leapt 6.2 per cent, the fastest pace since 1990, as new home prices and rents climbed together.
- Core inflation hit 3.2 per cent, the fastest since 1991, leaving the Bank of Canada under pressure to raise its 0.25 per cent rate at its March announcement.
In mid-February 2022, Statistics Canada reported that the country's annual inflation had climbed to 5.1 per cent in January, the first time in more than thirty years that the rate has passed five. Its rise was carried mostly by the cost of shelter, gasoline and groceries, the everyday expenses that quietly shape how a household feels about the economy. Behind the numbers lies a familiar tension between a world recovering from a pandemic and a set of new anxieties over energy supplies and geopolitics, and the Bank of Canada now stands at the threshold where it must decide whether to begin lifting interest rates it has held low since March 2020.
On a Wednesday morning in February 2022, Statistics Canada released a number that many Canadians had been feeling in their wallets for months: annual inflation had reached 5.1 per cent in January, up from 4.8 per cent in December. It was the first time in more than three decades the rate had topped five per cent.
Three areas did most of the pushing. Gasoline was the sharpest, 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. Without gasoline, the agency said, the rate would have been 4.3 per cent. Groceries climbed 6.5 per cent, the largest annual jump since 2009, with beef, chicken and fish rising faster than before, and higher shipping costs from snarled supply chains running through the aisles. Shelter rose 6.2 per cent, the fastest since 1990, driven by new homes and rent.
The timing was pointed. The release came two weeks before the Bank of Canada's next rate decision. The central bank has kept its policy rate at 0.25 per cent since the pandemic began, and it is now widely expected to begin raising rates in March to cool prices. Core inflation, which the bank watches closely as a truer signal of underlying pressure, averaged 3.2 per cent, the fastest since 1991.
Economists at Desjardins expect inflation to accelerate further as energy costs keep climbing. For now, the next marker is March, when the first rate hike since the pandemic is anticipated.
On Wednesday morning, Statistics Canada reported that the country's annual inflation rate had reached 5.1 per cent in January, the first time it has topped five per cent in more than three decades. December's reading was 4.8 per cent.
Three categories did most of the pushing: housing, gasoline and groceries. Gasoline was the sharpest. Pump prices were up 31.7 per cent from January 2021, against a backdrop of growing worry over global oil supplies tied to the threat of Russian military action against Ukraine. Without gasoline in the mix, the agency said, the annual rate would have been 4.3 per cent. Even that figure is the fastest pace on record.
Grocery bills climbed 6.5 per cent over the year, the largest annual increase since May 2009. Beef, chicken and fish all rose faster in January than they had in December, and margarine and condiments were up by double digits compared with a year earlier. Statistics Canada tied the increase in food costs to higher shipping costs stemming from global supply chain problems.
Shelter costs rose 6.2 per cent year over year, the fastest pace since February 1990. The agency pointed to higher prices for new homes and to rent increases.
Royce Mendes, managing director and head of macro strategy at Desjardins, said inflation is set to accelerate further as energy prices continue to rise.
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. It is widely expected to raise the rate in March, likely the first of several increases this year meant to cool inflation.
The bank also watches core inflation closely, since it is considered a better gauge of underlying price pressures. The average of the three core 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 March announcement, where the first rate hike since the pandemic began is widely anticipated.
Citações Notáveis
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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