Canada’s inflation rate climbs to highest level in a decade as cost-of-living increases for Albertans
CALGARY -- Albertans are continuing to recover financially from the COVID-19 pandemic, but the price of basic goods isn’t providing any sort of reprieve as inflation rates heat up.
Canada’s inflation rate increased to 3.6 per cent in May, which is the fastest pace in a decade, according to Statistics Canada. The data agency notes that the price of several goods is increasing much faster than usual, which includes everything from home renovations, energy, groceries, and other consumer products.
The cost of lumber for example has soared, according to Chicago Lumber Futures, from just over $400USD per thousand board feet at the beginning of the pandemic, to now as high as $1,700USD per thousand board feet.
Meanwhile, gasoline prices have soared 43 per cent this year with the average cost per litre in Calgary coming in at around $1.33.
The price of traveller accommodation also rose up 6.7 per cent, which is the highest rate seen since the pandemic began.
The increases are hitting consumers harder than expected, but also smaller businesses like Urban Butcher.
“The more in demand cuts like the grilling cuts and steaks are seeing a much bigger jump in upwards of the 10 to 15 per cent range,” said store Manager, Shane Eustace.
“A lot of it is supply and demand, we’re subject to market forces even though we’re a naturally raised beef store that deals with smaller suppliers.
Eustace adds that cattle and feed prices in the United States have created a concern as his store doesn’t have the buying power of a big box retailer.
“We try to model where those prices are going and try to provide alternatives and so on to find ways to give people creative meal ideas in spite of the price.”
Several shoppers CTV News spoke with outside of grocery stores on Thursday agree that they’re now changing their habits and shopping more strategically.
A new poll from Angus Reid Institute also found that 92 per cent of Canadian shoppers expect their grocery bill to climb in the next six months, while just one per cent thought their costs would drop in that time frame.
NO NEED TO OVERREACT: ECONOMIST
While the 3.6 per cent increase in Canada’s inflation rate represents a spike much larger than the Bank of Canada’s targeted one to three per cent range, some economists are suggesting there’s no need to panic.
Associate Professor in the University of Calgary’s Department of Economics Trevor Tombe says the inflation rate in May is measured relative to where it was in May of last year when the pandemic began.
“That’s when prices fell a lot actually in April and May related to those disruptions from COVID so this is an increase from a lower initial level so we still are behind where we would have been in terms of price increases if COVID never happened,” Tombe said.
“The biggest factor pushing that 3.6 per cent inflation rate is gasoline, which is up over 40 per cent for the year, so without gasoline price increases, the inflation would have been 2.5 per cent which is within that one to three per cent target range that we have in Canada.”
Tombe adds that he expects inflation in the future to remain right where the Bank of Canada wants it to be around the two per cent range.
“Gasoline is an interesting one to watch because if oil prices fall then pretty soon we might see inflation numbers on the lower end of that target range.”