Reference to the CFA’s Advocacy Update from May 19, 2022

Canada’s official inflation rate rose to 6.8 per cent in April, a new 31-year high.

Statistics Canada reported on Wednesday that the cost of living crept higher mainly because of increases in the cost of food and shelter. Food prices have risen by 9.7 per cent in the past year, while shelter costs are up by 7.4 per cent.

Global factors, including the war in Ukraine disrupting the price and supply of grains, as well as outbreaks of bird flu and extreme weather events in the United States, are combining to drive up the cost of meat and produce.

Among the increases:

• Fresh vegetables, up 8.2 per cent
• Fresh fruit, up 10 per cent
• Meat, up 10.1 per cent
• Bread, up 12.2 per cent
• Coffee, up 13.7 per cent
• Pasta, up 19.6 per cent.

Gas prices ease slightly

Gasoline has been a major driver of inflation lately, but pump prices actually fell by 0.7 per cent in April after spiking by more than 11 per cent the previous month. Compared to where they were a year ago, gas prices are still up by more than a third, however.

Economists had been expecting the overall inflation figure to ease slightly from March’s 6.7 per cent level, but instead it went slightly higher. That’s a troubling sign that inflation has yet to peak, even though it’s at its highest level since 1991.

US Inflation

The U.S. has also seen its inflation rate skyrocket in recent months, but numbers for April suggest that the wave may have crested there, with the official figure cooling to 8.3 per cent in April from 8.5 per cent in March.

Interest rate increase coming

The high inflation number makes it even more likely that the Bank of Canada will hike its benchmark interest rate at its next policy meeting in early June.