Inflation is entrenched in the country despite the comforting speeches of the political and monetary authorities. In fact, core inflation, the one that excludes volatile sectors like energy and food, is accelerating after it began to slow in the United States, Desjardins economists note.
Posted yesterday at 8:35 a.m.
As for the National Bank (BN), forecasters now expect the situation to deteriorate a little more next month. “It is now likely that annual inflation will continue to rise in May. Gasoline is up 11% so far this month, while the CPI [indice des prix à la consommation] natural gas could increase further. It is also likely that it will take longer than we thought to return to a more comfortable level for central banks”, writes the team of economists of the BN, led by Stéfane Marion, economist and chief strategist .
In April, consumer prices in Canada rose 6.8% year over year. This is a slight increase compared to March (+ 6.7%), revealed Statistics Canada on Wednesday morning. The year-over-year increase in April was mainly attributable to food and shelter prices. Gasoline price increases were weaker in April than in March.
Price growth, excluding food and energy, has been accelerating in Canada for several months, unlike what is happening in the United States.
Royce Mendes, Managing Director and Head of Macroeconomic Strategy, and Tiago Figueiredo, Partner – Macroeconomic Strategy, at Desjardins
“The annualized variation over three months in seasonally adjusted prices, excluding food and energy, is 6.9% in Canada, while this same measure is 5.7% south of the border, they continue. The average of the Bank of Canada’s three core measures also soared in April, now averaging 4.2%, up sharply from 3.8% in March. »
The Bank of Canada tracks three inflation indicators that are supposed to reflect core inflation. It is among other things on the basis of the evolution of these three indicators that the central bank adjusts its monetary policy by raising or not raising its key rates.
The average of these three measures in April reached its highest level since March 1990, point out the economists of the National Bank. ” [Leur] newer beat is even scarier. Our internal replications show that [deux de ces indices] reached an annualized pace of 7% and 6.5% respectively over the last three months. »
They expressed their concerns to the financial institution’s customers in an analysis published on Wednesday. “For the fourth consecutive month, the CPI was stronger than the consensus of economists expected. After the March release, there was reason to believe we had seen the peak in annual inflation given falling gasoline prices and a favorable base effect in play in April. This scenario did not materialize, and inflation remained very present due to generalized gains. »
Purchasing power decreases
Russia’s invasion of Ukraine at the end of February continued to influence energy, commodity and food prices. The labor market with unemployment at its lowest is putting upward pressure on wages. In April, the average hourly wage of employees rose 3.3% year over year, which means that, on average, the growth in prices exceeded that of wages and that the power of purchasing by Canadians has declined.
Prices go up by 10% at the supermarket
Canadians paid 9.7% more in April for food purchased from stores compared to April 2021. The increase in food prices, which exceeded 5% for the fifth consecutive month, was the largest since September 1981.
Food prices continued to rise at a staggering rate.
Excerpt from an analysis published by the National Bank
Some food products affected by the price increase
Pasta : + 19.6%
Cereals products : + 13.9%
Bread : + 12.2%
Meat : + 10.1%
Fresh fruits : + 10%
Rice : +7.4%
Cup of coffee : + 13.7%
Source: Statistics Canada
And the rents
“Rent prices increased in April (+4.5%) compared to the same month in 2021. Rising prices in Canada’s most populous provinces, namely Ontario (+5.3%), Quebec (+ 4.3%) and British Columbia (+ 6.4%), is partly responsible for the increase in rental prices,” reports StatCan.