The National Post's Kevin Carmichael summed up Statistics Canada's September inflation data by saying the cost of just about everything that Statistics Canada measures was more expensive in September.
Statistics Canada's Consumer Price Index or CPI increased by 4.4% year-over-year in September, up from the 4.1% reported in the previous month. This is the fastest pace of price increases seen since February 2003 and is the sixth consecutive month that Canada's inflation has been reported above the 1% to 3% range that the Bank of Canada is targeting.
While the Bank of Canada continues to target a CPI of 2% (plus or minus 1%), the National Post reports Scotiabank economist Derek Holt stated, "This isn't transitory at all. You can't just talk through inflation readings like this." Current data has led Scotiabank to forecast a rate hike of 25 basis points in July 22, followed by another increase in September, October and December 2022 and four quarterly moves in 2023, or a 2% increase in total. Canada's level of government spending and borrowing will be in the spotlight as contributors to price levels. High global oil prices are also contributing to inflation, as well as federal carbon taxes that are driving energy costs even higher across the country.
While data varies across the country, today's data release shows a 3.9% increase in food prices during the past 12 months, while reported 2.7% higher in August. Statistics Canada reports meat products up 9.5%, chicken up 10.3%, pork up 9.5%, dairy up 5.1% and edible fats and oils up 18.5%. Fresh vegetables year-over-year fell 3.2% in September.
Statistics Canada's food inflation data has been questioned over time, while today's report included a Spotlight on food prices in the CPI explanation. Food is viewed as the second-largest component of the CPI, with an estimated 17% of consumer expenditures spent on food from restaurants and stores.
Dr. Sylvain Charlebois, senior director of the Agri-Food Analytics Lab of Dalhousie University in Halifax, pointed to the study titled Canada's Food Price Report 2021, which forecast a 3 to 5% increase in food prices in 2021, while now states "It will likely be either close, or higher than 5%."
The group has long pointed out concerns over what it have felt were under-stated food inflation estimates, while in conjunction with the Toronto Star, will soon be releasing findings. "Don't expect a scandal but parts of the story will be troubling. No doubt," Charlebois stated on Twitter.
The Financial Post also released a video today titled "Why Canadian goods are about to get pricier". An interview with Dennis Darby, president and CEO of the Canadian Manufacturers and Exporters, discusses ongoing labour issues, supply chain "fragility" and rising energy costs that will continue to drive prices higher.
The attached chart shows the percent increase in prices for select goods since January of this year. Vegetable oils are showing the largest rise of 27.2%, with the largest percentage of this gain seen in the July-September period. While it takes time for prices to work through the system, it is interesting to note the modest 0.7% increase in bread prices since January 1, as well as the 1.9% drop in macaroni prices during the same period.
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