Canada Markets
Canada's Food Inflation Dips in September
Statistics Canada reported that the Consumer Price Index increased 3.8% in September on a year-over-year basis, down slightly from the 4% reported in August and the 8.1% high reached in June 2022. This is the last major economic data release prior to the next Bank of Canada interest rate decision scheduled for Oct. 25. Pre-report estimates reported by the media ahead of today's report varied from unchanged to slightly lower.
Statistics Canada commentary points to gasoline prices bucking the trend in August, rising 7.5% year-over-year in September, up from a 0.8% increase in August.
Food prices are seen falling faster than overall inflation, noting that September prices are seen cooling when compared to September 2022, a month when food prices were seen rising at the fastest pace in 41 years.
As seen on the attached chart, the inflation rate for all food (not seasonally adjusted) is reported at 5.9%, down from 6.8% last month, or the lowest seen since January 2022. Prices continue to rise, although the rate of growth is seen moderating.
This comes weeks after the federal government met with the CEOs of Canada's five biggest grocery chains, when they "agreed to work with" the government in reducing food prices. Today, CTV news reports that Industry Minister Francois-Phillippe Champagne indicted that he is looking for these operations to be more willing to share their plans with the public, while at least one grocer has indicated that information is withheld for competitive reasons.
It is no coincidence that the Canadian Federation of Independent Grocers has recently called on the Canadian Dairy Commission to pause any planned price increases for dairy products, pointing away from the grocery industry and at government policy as the reason for higher prices. Other factors include the carbon tax, the government's ban on plastics and higher interest rates as government policy adding costs to the food industry, while the government's sole focus is on the grocery CEOs, a means of signaling concern while attempting to stop the slide faced in popularity polls.
As seen on the attached chart, food inflation has exceeded the all-item inflation rate for 22 months, with the spread in September calculated at 2.2 percentage points (food inflation over the all-item inflation), the narrowest seen since July 2022.
Media sources have quoted a number of economists across the country who seem confident that the Bank of Canada will hold rates steady this month, while some have pointed to chances that the next move will be a cut in rates.
Cliff Jamieson can be reached at cliff.jamieson@dtn.com
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