Prices rose again in almost every area last month in Canada.
The Consumer Price Index (CPI) appreciated 4.7% in October compared to the same period 12 months ago, Statistics Canada reported on Wednesday. This increase is more marked than the 4.4% recorded in September and is a peak since February 2003.
The increase in the cost of living was particularly pronounced in the area of energy (+ 25.5%), notably due to a 41.7% increase in the price of gasoline, 48.1% of that of fuel oil and other fuels and 18.7% of that of natural gas. In the case of gasoline, Statistics Canada explained, “shortages of other energy sources, such as coal and natural gas, [ont] pushed the world’s major economies to use more oil for power generation, which led to higher prices at the pump ”.
Transport, food, accommodation …
However, the increase is not limited to this single sector of the economy: the prices of the eight main components of the basket of goods and services included in Statistics Canada’s measure have all increased. This is particularly the case for the basic elements of daily life, such as housing (+ 4.8%), food (+ 3.8%) and transport (+ 10.1%), which together constitute a little less than two-thirds of its consumption basket.
In the food sector, the cost of meat products (+ 9.9%) continued to rise, particularly for beef (+ 14%) and processed meat (+ 8.5%), of which bacon (+ 20.2%). “The labor shortage that has hampered production, persistent supply chain challenges and increases in feed prices continue to contribute to the rise in meat prices,” he said. we explained.
The rise in prices for motor vehicles (+ 6.1%) also remains high, mainly due to the global shortage of semiconductor chips.
On a month-to-month basis, the CPI rose 0.7% in October, its steepest increase since June 2020 as energy prices began to recover after plummeting in the first few months. of the COVID-19 pandemic.
“We are forced to admit that Canadian inflation has still not reached a plateau,” observed in a telephone interview at To have to Benoit P. Durocher, economist at the Mouvement Desjardins, who continues to believe that this phenomenon is largely the result of “transitory phenomena” resulting from the health crisis. Provisional gasoline data for November even suggests that it could hold us back another hike before stabilizing. “You will probably have to wait a few months after that before it starts to go down. “
Rising interest rates in sight
The Bank of Canada had already warned that it expected high inflation for the end of the year, said Matthieu Arseneau and Alexandra Ducharme of the National Bank, in a brief analysis. Higher-than-normal inflation will have to get used to over the next few months, “supply chains are still disrupted and labor shortages portend inflation driven by wages”, said. they warned.
In this context, “it is almost a relief that these new inflation measures are not higher than expected”, commented the chief economist of the Bank of Montreal, Douglas Porter. Going, in October, from 1.8% to 3.3% for an average of 2.7%, the indicators of the Bank of Canada aiming at isolating the most volatile and circumstantial factors reveal a closer fundamental inflation of its 2% target than it seems.
However, the central bank will soon raise its key rate, which is currently at its lowest level of 0.25%, think economists from the Mouvement Desjardins. Last September, they predicted that this first interest rate hike would come in the fall of 2022. Last month, they were leaning towards July. Today, they predict that that moment will come as early as April. “The Bank of Canada will increase its rates cautiously because it knows Canadians are very indebted and wants to give them time to adjust,” said Benoit P. Durocher.