In the summer of 2022, Canada's households felt the weight of a long-gathering pressure as annual inflation climbed to 8.1 per cent in June, the sharpest reading the country had seen since 1983. The rise came on the heels of May's 7.7 per cent, a sign that prices were still gathering momentum rather than settling. Much of the climb traced back to gasoline, which had grown more than half again as expensive as a year earlier, though energy and food costs were rising too. Behind the numbers stood an economy reopening after years of restraint, and a central bank that had responded with a full-poin
Canada's Inflation Climbs to 8.1% in June, Highest Since 1983
Gas prices were up more than 50 per cent from a year earlier
Mark
So the headline is 8.1 per cent. Why does that number land harder than the 7.7 from May?
Mimi
Because it's the highest annual reading since January 1983. And it rose from the month before, so the trend is still pointing up.
Mark
What pushed it up in June?
Mimi
Statistics Canada said mostly gas. Prices at the pump were up more than 50 per cent from a year earlier, and that growth sped up.
Luke
Worth being careful there. The agency said the acceleration was largely gas. That's not the same as saying gas explains all of the 8.1 per cent. Energy and food were described as continuing to rise, but we don't have a breakdown here.
Mark
Was this a surprise to anyone?
Mimi
Not to economists. The report says it matched expectations, with energy and food rising and the economy reopening further.
Mark
And the Bank of Canada?
Mimi
It raised its key rate a full percentage point to 2.5 per cent at its latest decision, citing fears about inflation expectations among consumers and businesses.
Luke
Note that the rate hike came before this June figure. Whether it will bring inflation down isn't something this reporting can tell us. That's still unknown.
Der Puls
- Annual inflation jumped to 8.1 per cent in June, up from 7.7 per cent in May, the fastest pace since 1983.
- Gasoline prices surged more than 50 per cent over the year, pulling household budgets tight at the pump.
- Energy and food costs kept climbing as the economy reopened and demand pressed against already elevated prices.
- The Bank of Canada answered with a full-point rate hike to 2.5 per cent, and the question now is whether expectations of high inflation keep rising.
In the summer of 2022, Canada's households felt the weight of a long-gathering pressure as annual inflation climbed to 8.1 per cent in June, the sharpest reading the country had seen since 1983. The rise came on the heels of May's 7.7 per cent, a sign that prices were still gathering momentum rather than settling. Much of the climb traced back to gasoline, which had grown more than half again as expensive as a year earlier, though energy and food costs were rising too. Behind the numbers stood an economy reopening after years of restraint, and a central bank that had responded with a full-point rate increase to 2.5 per cent, now watching closely whether public expectations of ever-higher prices would take hold.
Canada's annual inflation rate reached 8.1 per cent in June, Statistics Canada reported from Ottawa on July 20, 2022. It is the largest yearly increase the country has recorded since January 1983, and it arrived on the heels of a 7.7 per cent reading in May, meaning prices were still accelerating rather than cooling.
The main culprit was gasoline, which had risen more than 50 per cent from a year earlier. Energy and food costs were also climbing, and as the economy reopened and more activity resumed, demand pushed harder against prices that were already high. Economists said the figure matched their expectations, so it was more confirmation than surprise.
The Bank of Canada has responded by raising its key interest rate by a full percentage point, to 2.5 per cent. Officials have voiced concern that consumers and businesses are beginning to expect persistently high inflation, a worry because such expectations can fuel the very increases policymakers are trying to contain.
The coming months will show whether those expectations keep rising and whether the rate increases start to slow the climb.
Canada's annual inflation rate reached 8.1 per cent in June, according to figures released from Ottawa on July 20, 2022. It is the biggest year-over-year change the country has recorded since January 1983.
The new number follows a reading of 7.7 per cent in May, so prices were still accelerating rather than leveling off. Statistics Canada said the pickup in June came largely from gasoline, whose prices rose even faster than they had the month before.
Compared with a year earlier, gas prices were up by more than 50 per cent. That single category carried much of the month's increase, though the agency's reading of the broader picture was that energy and food costs were both continuing to climb.
The June figure did not catch economists off guard. It matched what they had expected, as energy and food prices kept rising and the economy reopened further. The reopening is part of the story: as more activity resumed, demand pressed on prices that were already elevated.
The Bank of Canada has been responding. At its most recent rate decision, it raised its key interest rate by a full percentage point, to 2.5 per cent. The central bank has pointed to growing concern that consumers and businesses are coming to expect high inflation, a worry because expectations can feed into the very price increases policymakers are trying to contain.
What to watch next is whether those expectations keep rising, and whether the bank's rate increases begin to slow the climb that June's 8.1 per cent reading represents.
Bemerkenswerte Zitate
Price acceleration in June was largely the result of gas prices rising even faster.— Statistics Canada (paraphrased)
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