In the cold early days of 2022, Canadians learned that the cost of living had climbed to 5.1 per cent above where it stood a year earlier, the first time in three decades that the annual pace had crossed the five per cent line. The lift came mostly from housing, gasoline and groceries, the everyday necessities that quietly shape a household's sense of security. Behind the figures stood a world strained by fears over oil supplies and a tangle of disrupted shipping lanes, reminding us how distant geopolitics can arrive at the kitchen table. With the central bank poised to act within weeks, the c
Canada's Annual Inflation Tops 5% for First Time in Three Decades, Led by Gas, Groceries and Shelter
The first reading above five per cent in more than 30 years
Mark
Five point one per cent. Why is that number getting so much attention?
Mimi
Because it's the first reading above five per cent in more than 30 years. And it's not one thing. Gasoline, groceries and shelter all moved at once.
Mark
Gasoline was up 31.7 per cent. Is that the whole story?
Mimi
No. Without gasoline, inflation would still have been 4.3 per cent, which Statistics Canada says is the fastest on record for that measure.
Luke
Worth being careful there. The agency links the gas jump to worries about Russia and Ukraine, but that's the backdrop it describes, not a proven single cause.
Mark
Groceries and housing too?
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 rent.
Mark
And the Bank of Canada?
Mimi
Its rate has sat at 0.25 per cent since March 2020. A hike is widely expected in March, probably the first of several.
Luke
Widely expected isn't announced. And Royce Mendes of Desjardins saying inflation will accelerate is one economist's forecast, not a reported outcome.
Mimi
Fair. What's confirmed is January's data, and core inflation at 3.2 per cent, the highest since August 1991.
Le Pouls
- Annual inflation jumped to 5.1 per cent, the first reading above five per cent in more than thirty years, and the news landed like a jolt across households and boardrooms alike.
- Gasoline surged 31.7 per cent in a year as fears over Russian action against Ukraine rattled global oil markets, pushing fuel costs into the center of every commute.
- Grocery prices climbed 6.5 per cent, the steepest annual gain since 2009, while shelter costs rose 6.2 per cent, squeezing budgets already stretched thin.
- Economists warn the pressure is not easing, and with the Bank of Canada expected to lift its 0.25 per cent rate in March, policymakers are racing to cool a fever that shows no sign of breaking.
In the cold early days of 2022, Canadians learned that the cost of living had climbed to 5.1 per cent above where it stood a year earlier, the first time in three decades that the annual pace had crossed the five per cent line. The lift came mostly from housing, gasoline and groceries, the everyday necessities that quietly shape a household's sense of security. Behind the figures stood a world strained by fears over oil supplies and a tangle of disrupted shipping lanes, reminding us how distant geopolitics can arrive at the kitchen table. With the central bank poised to act within weeks, the country now waits to see whether the rising tide of prices will be met with restraint or will continue to climb.
On a Wednesday morning in February, Statistics Canada released a figure that many had been bracing for without quite wanting to believe. The annual inflation rate had risen to 5.1 per cent in January, up from 4.8 per cent the month before. It was the first time in more than three decades that the yearly pace had climbed above five per cent.
Three areas carried most of the weight: housing, gasoline and groceries. Gasoline led the climb, up 31.7 per cent from January 2021, as worry over global oil supplies and the threat of Russian military action against Ukraine pushed fuel prices upward. Even without gasoline, the agency said, inflation would have reached 4.3 per cent, the fastest pace on record for that measure.
At the grocery store, prices rose 6.5 per cent over the year, the largest annual gain since 2009. Beef, chicken and fish all climbed faster than they had in December, and higher shipping costs, a byproduct of snarled global supply chains, rippled into the shelves. Shelter rose 6.2 per cent, the fastest pace since 1990, driven by new home prices and rising rents.
The timing sharpened the moment. The report arrived two weeks before the Bank of Canada's next rate decision. The central bank had held its key rate at 0.25 per cent since the pandemic began and recently abandoned its promise to keep emergency-level rates. A March increase is widely expected, likely the first of several. Economists such as Royce Mendes of Desjardins expect inflation to keep accelerating as energy costs climb, and core measures, which the bank watches closely, reached their fastest pace since 1991.
What comes next is the March decision, and whether energy prices keep pushing the headline figure higher.
On Wednesday morning, Statistics Canada reported that the country's annual inflation rate had reached 5.1 per cent in January, up from 4.8 per cent in December. It is the first time in more than 30 years that the yearly pace has climbed above five per cent.
Three categories did most of the work: housing, gasoline and groceries. Gasoline was the sharpest mover, up 31.7 per cent compared with January 2021. The agency tied that jump to growing worry over global oil supplies, set against the threat of Russian military action against Ukraine.
Stripping gasoline out of the picture does not make the number look benign. Statistics Canada said that without fuel, annual inflation would have been 4.3 per cent in January, which the agency notes is the fastest pace on record for that measure.
At the grocery store, prices rose 6.5 per cent from a year earlier, the biggest 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 January 2021. The agency pointed to higher shipping costs, a product of global supply chain problems, as a driver of food prices.
Shelter costs climbed 6.2 per cent year over year, the fastest pace since February 1990. Statistics Canada attributed that 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 keep rising.
The timing matters because 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 in March, likely 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, and Statistics Canada said that was the fastest pace since August 1991.
What to watch next is the March rate decision, and whether energy prices keep pushing the headline figure higher in the months that follow.
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 (paraphrased)
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