In the middle of 2022, Canadians found that the cost of living had climbed to a level not seen since the early 1980s, when Statistics Canada reported that consumer prices in June had risen 8.1 per cent over the year before. The number rose from May's 7.7 per cent, and the chief culprit was the familiar sting at the gas pump, where fuel was more than half again as expensive as it had been twelve months earlier. Economists were not caught off guard, since energy and food costs had been steadily rising as the country reopened, yet the figure still carried weight. It arrived just after the Bank of
Canada's Inflation Hits 8.1% in June, Highest Since January 1983
The largest yearly change in consumer prices since January 1983
Mark
So what actually happened here? Inflation went from 7.7 to 8.1 per cent?
Mimi
Yes. In June, prices were 8.1 per cent higher than a year earlier, the biggest yearly jump since January 1983. May had been 7.7 per cent.
Mark
And the cause?
Mimi
Statistics Canada says mostly gas. Prices at the pump were up more than 50 per cent from a year before, and that pushed the overall figure higher.
Luke
Careful with "mostly." The agency says the acceleration was largely down to gas, which is about the change from May. It doesn't say gas explains the whole 8.1 per cent.
Mark
Fair. Was this expected?
Mimi
Economists expected it. Energy and food prices kept rising and the economy reopened further.
Luke
Worth noting that's a general statement. The report we have doesn't give a specific forecast number or a food price figure.
Mark
Where does the Bank of Canada fit?
Mimi
It had just raised its key rate by a full percentage point to 2.5 per cent, worried about inflation expectations among consumers and businesses.
Luke
And we don't know yet whether that hike will slow prices. The June data can't tell us that.
Mark
So what's the thing to watch?
Mimi
Whether gas and food prices keep climbing, and how the central bank reacts if inflation stays this high.
O Pulso
- Annual inflation jumped to 8.1 percent in June, the sharpest reading since January 1983, and the number landed like a warning bell.
- Gasoline prices surged more than 50 percent from a year earlier, pulling the whole index upward at every fill-up.
- The Bank of Canada answered with a full percentage point rate hike to 2.5 percent, a move aimed at cooling runaway expectations.
- Energy and food prices kept climbing as the economy reopened, and the June data showed the pressure still building rather than easing.
- The central question now is whether the rate increase can bend the curve before a 40-year high becomes entrenched in household and business plans.
In the middle of 2022, Canadians found that the cost of living had climbed to a level not seen since the early 1980s, when Statistics Canada reported that consumer prices in June had risen 8.1 per cent over the year before. The number rose from May's 7.7 per cent, and the chief culprit was the familiar sting at the gas pump, where fuel was more than half again as expensive as it had been twelve months earlier. Economists were not caught off guard, since energy and food costs had been steadily rising as the country reopened, yet the figure still carried weight. It arrived just after the Bank of Canada had lifted its key rate by a full point to 2.5 per cent, a bold step taken out of fear that rising prices would become an expectation that feeds on itself.
Canada's annual inflation rate reached 8.1 per cent in June, according to Statistics Canada's report of July 20, 2022. It is the steepest yearly rise in consumer prices the country has seen since January 1983, and it marks a clear climb from the 7.7 per cent recorded in May.
The agency pointed mainly to gasoline. At the pump, prices were more than 50 per cent higher than a year before, and that jump pushed the overall figure past May's level. Economists were not surprised; energy and food costs had kept rising as the economy reopened, and the June numbers showed those pressures still gathering force rather than fading.
The news came just after the Bank of Canada raised its key interest rate by a full point, to 2.5 per cent. The central bank was responding to growing worry that households and businesses would come to expect prices to keep climbing, and that expectation can become self-fulfilling. The two developments now sit side by side, though the June data predates any effect the hike might have on prices.
What comes next depends on whether gas, energy and food continue to climb, and on how the Bank of Canada responds if inflation stays near this four-decade high.
Canada's annual inflation rate reached 8.1 per cent in June, Statistics Canada reported on July 20, 2022. It is the largest yearly change in consumer prices the country has recorded since January 1983.
The June figure is a step up from May, when inflation stood at 7.7 per cent. In other words, prices were rising faster in June than they had been a month earlier, and they were already well above where they were a year before.
The statistical agency pointed to one main reason for the acceleration: gasoline. Compared with June of the previous year, gas prices were up more than 50 per cent. That jump in what drivers pay at the pump pushed the overall inflation number higher than it had been in May, because gas prices themselves were climbing even faster than before.
The result was not a surprise to economists. The pickup was in line with what they had expected, given that energy and food prices had continued to rise and the economy had reopened further. Those pressures were already familiar by midsummer; the June report showed them still building rather than easing.
The release arrived shortly after the Bank of Canada made its most recent rate decision. The central bank raised its key interest rate by a full percentage point, bringing it to 2.5 per cent. The bank's move came as concern grew about inflation expectations among consumers and businesses, meaning the worry that households and companies would come to assume high price growth would continue.
So the two pieces of news sit side by side: a rate increase of a full point, large by recent standards, and an inflation reading that still moved higher afterward. The June data covers a period before the effects of that hike could be expected to show up in prices.
What to watch next is whether gas, energy and food prices keep rising as the reopening continues, and how the Bank of Canada responds if the annual rate stays near or above this 40-year high.
Citações Notáveis
Price acceleration in June was largely the result of gas prices rising even faster.— Statistics Canada (paraphrased)
Quer a matéria completa?
Leia o original em Vancouver Is Awesome ↗
Economy & Finance