Canada’s consumer price inflation in June rose to 8.1% – the largest yearly change since January 1983.
In its report, Statistics Canada attributed higher gas prices as a key contributor to inflation last month, with prices rising 6.2% on the month and 55% on the year. Food and shelter costs continue to increase, but at a slower rate: the price for food rose 0.1%, and shelter costs went up 0.4%.
“On a year-over-year basis, consumers paid 54.6% more for gasoline in June following a 48.0% increase in May, contributing the most to headline consumer inflation,” said Statistics Canada.
“Prices at the pump rose 6.2% month over month in June, following a 12.0% increase in May. Gas prices largely followed crude oil prices, which peaked in the first week of June with higher global demand amid the easing of COVID-19 public health restrictions in China, the largest importer of crude oil.”
The cost of basic accommodations jumped by nearly 50% across Canada when compared to last year. Air travel also saw a 6.4% increase in prices.
Heavily impacted food items include onions which jumped by 25% in June, prices of carrots also spiked by 23% while canned beans went up by 20%.
Meats like chicken breast and ground beef spiked by 20% and 10% respectively. 1kg of chicken breast costs $15.04 on average while 1kg of ground beef goes for $10.32.
According to BNN Bloomberg, the increase in the consumer price index was lower than expected, as many by economists were anticipating increases of approximately 8.4% annually.
However, the record-high inflation rate will continue to put pressure on the Bank of Canada (BoC) to aggressively raise interest rates.
Earlier this month, the BoC announced it was hiking interest rates to 2.5%, a 100 basis point increase – the largest one-time increase since 1998.
“With the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates by raising the policy rate by 100 basis points today,” wrote the Bank of Canada in a news release.
The governor of the BoC warned Canadians to brace for further economic stress this winter and further skyrocketing prices.
“We do have a material reduction in growth. We are forecasting growth this year at three-and-a-half percent moving down to one and three-quarters percent next year. That is a material reduction in growth. That does imply some pain,” Tiff Macklem said.
“Yes, the economy is going to slow. The economy needs to slow. We need to take the steam out of inflation.”