Canada's official inflation rate slowed for the third month in a row in September, even as many goods and services continued to get more expensive.
Statistics Canada reported Wednesday that the consumer price index declined to 6.9 per cent in September, down from seven per cent in August.
The rate seems to have peaked at a 40-year high of 8.1 per cent in June.
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Economists had been expecting an even bigger drop off, to about 6.7 per cent, but food prices pulled the headline number up.
Food purchased at stores increased at a pace of 11.4 per cent. That's the fastest pace of increase in grocery bills since August 1981.
Some of the price increases in the grocery aisle in the past year are eye-popping:
- Cereals are up 17.9 per cent.
- Baked goods are up 14.8 per cent.
- Fresh fruit is up by 12.9 per cent.
- Fresh vegetables are up by 11.8 per cent.
- Dairy products are up by 9.7 per cent.
- Meat prices are up by 7.6 per cent.
The number means food inflation is almost twice as much as the overall inflation rate. Food inflation has now been higher than the overall rate for 10 months in a row.
Worst still, there's reason to fear that food prices may keep going higher for a while yet, for seasonal and currency reasons. "We have a weak Canadian dollar right now and we import a lot of what we consume," economist Derek Holt said in an interview.
Drought conditions in food-producing parts of Europe and the United States will also push up prices for Canadian shoppers. "We're headed in the right direction, I think, as supply chains adjust — but it's still going to require some patience."
Shopper John Romanelli says the cost of food is "atrocious" right now and he places the blame squarely at the feet of the grocery chains.
"They've never made more money than they are today," he told CBC News in an interview Tuesday. "We just went through two years of COVID and they're making millions off us. … All they're doing is pocketing everyone's hardship."
Gasoline prices, which were a major contributor to inflation earlier in the year, have now fallen for three months in a row. They're still, on average, 13 per cent higher than they were a year ago, but they fell by more than seven per cent during the month of September. The lone exception to the pump price trend was B.C., where unexpected oil refinery shutdowns led to the price of gasoline spiking all over the province. Pump prices were up by 27 per cent during the month.
Gas prices have risen this month across the country, something that may lead to an unpleasant surprise in next month's inflation data. "Given that those prices have since reversed, the next month could see headline inflation temporarily heading in the wrong direction," said CIBC economist Karyne Charbonneau.
Food and energy prices are always volatile, which is why the data agency strips those out of some of its numbers to calculate to get a better sense of the underlying price pressures in the overall economy.
The data agency tabulates three measures — CPI-median, CPI-trim and CPI-common — that taken together are known as "core inflation".
The core rate was unchanged at 5.3 per cent during the month, a disturbing sign that inflation is starting to become entrenched even as the Bank of Canada has been hiking rates aggressively to rein it in.
Charbonneau says the biggest thing the central bank will take away from the latest inflation numbers is the need for higher rates to further cool demand. "The Bank of Canada has clearly not slayed the inflation dragon yet and is therefore set for another large rate hike next week."
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2022-10-19 17:54:59Z
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