In January, the cost of living in Canada climbed to a level not seen in more than three decades, as annual inflation reached 5.1 per cent and crossed the five-per-cent threshold for the first time since the early 1990s. Behind the figure stand familiar pressures made sharper by a fragile world: fuel at the pump, the roof over one's head, and the food on the table, each rising for reasons tied to distant supply lines and geopolitical unease. The moment arrives just before the central bank must decide whether to abandon the emergency footing it has kept since the pandemic began, a choice that wi
Canada's Annual Inflation Tops 5 Per Cent for First Time in Over 30 Years
Inflation topped five per cent for the first time in more than 30 years
Mark
Five point one per cent sounds like a number out of another era. How rare is it?
Mimi
It's the first time inflation has topped five per cent in over 30 years, according to Statistics Canada. December was 4.8, so it's still climbing.
Mark
What's pushing it up?
Mimi
Housing, gasoline and groceries. Gasoline was up 31.7 per cent from a year earlier, groceries 6.5 per cent, and shelter 6.2 per cent, the fastest since February 1990.
Luke
Gasoline gets the headlines, but the report says it isn't the whole story, right?
Mimi
Right. Without gasoline, inflation would have been 4.3 per cent, which the agency says is the fastest on record. So the pressure is broad.
Mark
Why does the Bank of Canada decision matter here?
Mimi
The report came two weeks before its March announcement. The rate has been 0.25 per cent since March 2020, and a hike is widely expected.
Luke
Widely expected isn't decided, though. The bank hasn't said it will move, only that it dropped its promise to hold at emergency levels.
Mark
And the forecast that it gets worse?
Luke
That's one economist's view. Royce Mendes of Desjardins says it will accelerate as energy prices rise, but that depends on energy prices, which are tied to a threat, not an event.
Mimi
Fair. The core measures at 3.2 per cent are the firmer signal, since the bank watches them closely.
Il Polso
- Annual inflation jumped to 5.1 per cent, the first breach of five per cent in more than thirty years, and the figure is climbing rather than leveling off.
- Gasoline prices surged 31.7 per cent from a year earlier while worries about Russian action against Ukraine rattled global oil markets.
- Shelter costs rose 6.2 per cent, the fastest since 1990, and grocery bills jumped 6.5 per cent as shipping snarls rippled into the supermarket aisle.
- The Bank of Canada, still holding its policy rate at a pandemic-era 0.25 per cent, faces a decision two weeks away where a March rate hike is widely expected.
- Core inflation gauges also accelerated to 3.2 per cent, signaling that price pressures are spreading beyond the pump and sitting deeper in the economy.
In January, the cost of living in Canada climbed to a level not seen in more than three decades, as annual inflation reached 5.1 per cent and crossed the five-per-cent threshold for the first time since the early 1990s. Behind the figure stand familiar pressures made sharper by a fragile world: fuel at the pump, the roof over one's head, and the food on the table, each rising for reasons tied to distant supply lines and geopolitical unease. The moment arrives just before the central bank must decide whether to abandon the emergency footing it has kept since the pandemic began, a choice that will shape how ordinary households feel the squeeze in the months ahead.
On Wednesday, Statistics Canada reported that annual inflation had climbed to 5.1 per cent in January, up from 4.8 per cent in December. It is the first time in more than thirty years that the rate has topped five per cent, and the agency pointed to three forces doing most of the work: housing, gasoline and groceries.
Gasoline led the way. Pump prices were 31.7 per cent higher than a year earlier, at a moment when fears over Russian military action against Ukraine were unsettling global oil supplies. Without fuel in the calculation, the rate would have sat at 4.3 per cent, which the agency said is also its fastest pace on record. The pressure, in other words, reached well beyond the gas station.
At the grocery store, food prices rose 6.5 per cent, the steepest yearly increase since 2009. Beef, chicken and fish climbed faster in January than in December, and shipping costs tied to global supply chain problems pushed through to shoppers. Shelter costs, meanwhile, rose 6.2 per cent, the fastest since 1990, driven by pricier new homes and rent increases.
Economists expect no relief soon. Royce Mendes of Desjardins said inflation is set to accelerate as energy prices keep climbing. The timing sharpens the stakes: the Bank of Canada, which has held its key rate at 0.25 per cent since the pandemic began, will announce its next decision in two weeks, and a March increase is widely anticipated. The central bank's preferred core measures, averaging 3.2 per cent, point the same direction.
On Wednesday morning, Statistics Canada reported that the country's annual inflation rate reached 5.1 per cent in January, up from 4.8 per cent in December. It is the first time the rate has topped five per cent in more than 30 years.
The agency pointed to three main drivers: housing, gasoline and groceries. Gasoline was the most dramatic of them. Pump prices in January were 31.7 per cent higher than a year earlier, at a time when worries about global oil supplies were mounting over the threat of Russian military action against Ukraine. Statistics Canada said that without gasoline in the mix, the annual rate would have been 4.3 per cent. The agency notes that figure is the fastest pace it has on record, so the pressure was not confined to the pump.
Grocery bills told a similar story. Food prices were up 6.5 per cent from a year earlier, the largest yearly increase since May 2009. Beef, chicken and fish all rose faster in January than they had in December, while margarine and condiments climbed by double digits compared with January 2021. Statistics Canada tied the higher food costs to increased 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 attributed that to higher prices for new homes along with 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, and it recently dropped its promise to keep the rate at emergency levels. Markets widely expect it to raise rates in March, likely the first of several increases over the year meant to cool inflation.
The bank's preferred gauges point the same way. The average of its three core inflation measures, considered better indicators of underlying price pressure and closely watched by the central bank, was 3.2 per cent in January, up from 2.93 per cent in December. Statistics Canada said that is the fastest pace recorded since August 1991.
The next marker is the Bank of Canada's announcement in two weeks, where the expected rate increase would be the first move away from the emergency-level policy rate of the pandemic era.
Citazioni salienti
Inflation is set to accelerate even further as energy prices continue to rise.— Royce Mendes, managing director and head of macro strategy, Desjardins (paraphrased)
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