In the summer of 2022, Canada found its household budgets pressed by the highest annual inflation the country had seen since the early 1980s. Statistics Canada reported from Ottawa on July 20 that prices in June had risen 8.1 per cent over the year before, up from 7.7 per cent in May, with gasoline running more than half again as expensive as a year earlier. The Bank of Canada, watching for signs that people had begun to expect ever-higher prices, had already answered with a full percentage point rate increase to 2.5 per cent, and this new reading shows that the climb had not yet turned.
Canada's Inflation Climbs to 8.1% in June, Its Highest Since January 1983
The highest yearly change since January 1983
Mark
Eight point one per cent. What makes that number stand out?
Mimi
It's the biggest yearly change since January 1983. And it's higher than May's 7.7 per cent, so it's still accelerating.
Mark
What pushed it up?
Mimi
Mostly gas. Prices at the pump were up more than 50 per cent from a year earlier, according to Statistics Canada.
Luke
Worth noting that's one category carrying a lot of weight. The report says gas drove most of the acceleration, but it doesn't give a breakdown of how much each category contributed.
Mark
Were economists surprised?
Mimi
No. The June reading matched what they expected, with energy and food prices rising and the economy reopening further.
Luke
Right, so expected isn't the same as comfortable. The source tells us the forecast was met, not what anyone thinks happens next.
Mark
And the Bank of Canada?
Mimi
It raised its key rate by a full percentage point to 2.5 per cent, citing fears that inflation expectations are rising among consumers and businesses.
Luke
That decision came before this June number. Whether it will be enough to slow prices is not something this reporting can tell us.
Mark
So what should a reader watch?
Mimi
The next inflation readings and the central bank's next rate decision.
El Pulso
- Inflation climbed to 8.1 per cent in June, its fastest pace since January 1983, and the number is still rising.
- Gas prices, up more than 50 per cent in a single year, are pulling the national figure higher and squeezing drivers.
- Rising energy and food costs add to the strain on households that have little room left in their budgets.
- The Bank of Canada has responded with a full-point rate hike to 2.5 per cent, but inflation continues to climb in spite of it.
- Officials are now watching whether fears of entrenched high-price expectations ease in the coming months.
In the summer of 2022, Canada found its household budgets pressed by the highest annual inflation the country had seen since the early 1980s. Statistics Canada reported from Ottawa on July 20 that prices in June had risen 8.1 per cent over the year before, up from 7.7 per cent in May, with gasoline running more than half again as expensive as a year earlier. The Bank of Canada, watching for signs that people had begun to expect ever-higher prices, had already answered with a full percentage point rate increase to 2.5 per cent, and this new reading shows that the climb had not yet turned.
Canada's annual inflation rate reached 8.1 per cent in June, Statistics Canada reported from Ottawa on July 20, 2022. It was the highest yearly change the country had recorded since January 1983, and a clear step up from May's 7.7 per cent. Prices were not just higher than a year before; they were accelerating.
The main driver was gasoline, which cost more than 50 per cent more than in June of the previous year. Energy and food prices kept climbing as well, and the reopening economy added to the pressure. Economists had anticipated a rise of this kind, so the forecasters were not caught off guard, even though the level itself was striking after nearly four decades.
The Bank of Canada had already acted, raising its key rate by a full point to 2.5 per cent. Its worry was that consumers and businesses had begun to expect high inflation to continue, and that such expectations could take hold. The June figure arrived after that move and showed prices still rising. Whether the pace eases will depend on the next readings and the bank's next decisions.
Canada's annual inflation rate reached 8.1 per cent in June, according to Statistics Canada, the largest year-over-year change the country has recorded since January 1983. The figure was released from Ottawa on July 20, 2022.
It marks a step up from May, when the rate stood at 7.7 per cent. So prices were not only higher than a year earlier, they were climbing faster than they had been a month before.
Statistics Canada pointed to gasoline as the main reason for the quickening pace. Compared with June of the previous year, gas prices were up by more than 50 per cent. That increase was large enough to push the overall inflation number higher, even as other categories also contributed.
Energy and food prices continued to rise through the month, and the economy continued to reopen further. Both factors were part of the backdrop to the June reading. The result was consistent with what economists had expected, so the jump did not come as a surprise to forecasters, even if the level itself was the highest in almost forty years.
The Bank of Canada had already moved aggressively in response to the trend. At its most recent rate decision, it raised its key interest rate by a full percentage point, bringing it to 2.5 per cent. The central bank's concern, as described in the reporting, is growing worry that expectations of high inflation are taking hold among consumers and businesses.
The June figure arrives after that decision, and it shows inflation still moving upward even with the rate increase. The next readings from Statistics Canada, and the Bank of Canada's next moves on interest rates, will show whether the pace of price increases begins to ease.
Citas Notables
Price acceleration in June was largely the result of gas prices rising even faster.— Statistics Canada (paraphrased)
Quieres la nota completa?
Lee el original en BradfordToday ↗
Economy & Finance