Largest annual increase in cost of living since GST was created
Canada’s inflation rate rose to 6.7 per cent in March, far more than economists were expecting and a full percentage point higher than February’s already 30-year high.
Statistics Canada reported Wednesday that all eight categories of the economy that the data agency tracks rose, from food and energy to shelter costs and transportation.
“The spike in prices over the month of March is the largest monthly increase since January 1991, when the goods and services tax was introduced,” economist Royce Mendes of Desjardins Group noted.
After years of relative stability, inflation has been on an up and down ride during the pandemic, with rates plunging in 2020 when the uncertainty of COVID-19 began, before roaring back in 2021 and beyond due to supply and demand imbalances, and record-low interest rates.
Canada is not the only country grappling with high inflation. In the U.S., the inflation rate hit a 40-year high of 8.5 per cent last month.
While the cost of just about everything is going up fast, transportation costs are leading the way, up 11.2 per cent in the past year. A big reason for that increase is the 39.8 per cent rise in gasoline costs since March of last year.
Gasoline prices rocketed higher in March mostly due to Russia’s invasion of Ukraine throwing global supplies into chaos. Although they have since come down a little, at one point last month numerous Canadian cities saw their average price for a litre of gasoline hit $2 for the first time ever.
Biggest factors pushing inflation up and down
This chart shows the change in various components in the 12 months up to March 2022.Gasoline39.8%Other owned accommodation expenses16.9%Homeowners’ replacement cost12.9%Purchase of passenger vehicles7.0%Rent4.1%Telephone services−2.5%Tools and other household equipment−3.1%Mortgage interest cost−5.4%Passenger vehicle insurance premiums−6.2%Passenger vehicle registration fees−28.2%Chart: Pete Evans/CBC Source: Statistics Canada
High gas prices have an outsized impact on overall inflation because the cost of shipping and transportation gets added to the cost of everything else, from grocery bills (up 8.7 per cent) to the price of durable goods like furniture (up by 13.7 per cent in the past year) and even plane tickets (up by 8.3 per cent.)
Prices for furniture jumped by more than eight per cent in the month of March alone. That’s the highest monthly increase in that category in more than 70 years.
‘Everything has gone up’
John Salgueiro, owner of JS Furniture in Winnipeg, has been in business since 1974 and said he’s “never ever seen a situation like this.”
“Everything has gone up , absolutely every single thing,” he said.
News Credits CBC NEWS