Canada's inflation rate jumps to new 31-year high of 6.7%
Canada's inflation rate rose to 6.7 per cent in March, far more than economists were expecting and a full percentage point higher than February's already 30-year high.
Statistics Canada reported Wednesday that all eight categories of the economy that the data agency tracks rose, from food and energy to shelter costs and transportation.
"The spike in prices over the month of March is the largest monthly increase since January 1991, when the goods and services tax was introduced," economist Royce Mendes of Desjardins Group noted.
After years of relative stability, inflation has been on an up and down ride during the pandemic, with rates plunging in 2020 when the uncertainty of COVID-19 began, before roaring back in 2021 and beyond due to supply and demand imbalances, and record-low interest rates.
Canada is not the only country grappling with high inflation. In the U.S., the inflation rate hit a 40-year high of 8.5 per cent last month.
While the cost of just about everything is going up fast, transportation costs are leading the way, up 11.2 per cent in the past year. A big reason for that increase is the 39.8 per cent rise in gasoline costs since March of last year.
Gasoline prices rocketed higher in March mostly due to Russia's invasion of Ukraine throwing global supplies into chaos. Although they have since come down a little, at one point last month numerous Canadian cities saw their average price for a litre of gasoline hit $2 for the first time ever.
Biggest factors pushing inflation up and down
High gas prices have an outsized impact on overall inflation because the cost of shipping and transportation gets added to the cost of everything else, from grocery bills (up 8.7 per cent) to the price of durable goods like furniture (up by 13.7 per cent in the past year) and even plane tickets (up by 8.3 per cent.)
Prices for furniture jumped by more than eight per cent in the month of March alone. That's the highest monthly increase in that category in more than 70 years.
'Everything has gone up'
John Salgueiro, owner of JS Furniture in Winnipeg, has been in business since 1974 and said he's "never ever seen a situation like this."
"Everything has gone up , absolutely every single thing," he said.
A lot of what Salgueiro sells is imported, and the price of those goods has skyrocketed in the pandemic. A container from Asia that used to cost him $4,000 US will likely cost him $20,000 US today.
And that's just the shipping costs. One of his biggest suppliers of bedroom sets just raised their price for the actual merchandise by 15 per cent overnight.
"From the merchandise costs to freight, it's astronomical," he said.
Food prices in particular tend to raise the ire of consumers, since it is hard to avoid or lessen the impact of rising prices on something that is such a necessity. But Zainab Williams, a financial planner with Elleverity Wealth Management in Caledon, Ont., says there are ways.
"Meal prepping is your go-to friend right now," she told CBC News in an interview. "You need to have a strategy to see what you can create with what you have in your pantry before replenishing."
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She says many of her clients have started using various apps that help consumers save money while eating well by offering deep discounts on food that's about to reach its best-before date.
"Families are doing a lot of financial acrobatics," she said, "so in this environment, you have to think outside the box."
Karen Peck from Toronto says she's being choosier at the grocery store lately. "It's tough for everybody right now," she said. "For me personally, I cook a lot more at home."
"Wherever you can save ... a few dollars here and there, it's what you can do."
Services getting more expensive, too
While the cost of anything that needs to be transported is going up, the service sector isn't immune to the current inflationary pressure.
The overall price for services has increased by 4.3 per cent in the past year, up from 3.8 in February. As TD Bank economist Leslie Preston noted, the main factor there wasn't pump prices; it was the easing of COVID-related health restrictions pushing up demand for close-contact services like restaurant dining and other in-person events.
"Price pressures across other areas of the economy are showing more heat both for goods and services," she said. "Inflation is likely to remain above the Bank of Canada's target range until 2023, crimping consumer purchasing power and driving interest rates higher."
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While the vast majority of goods and services got more expensive, a few things have gotten cheaper, although by nowhere near enough to offset the rise everywhere else.
They include a 5.4 per cent decrease in the cost of servicing a mortgage, a 6.2 per cent decline in the cost of car insurance, a 2.5 per cent decrease in the cost of phone bills, and a large decline of 28 per cent in the costs of car registration fees.
But that decline was not felt evenly across the country. The main reason for that drop was the Ontario government's decision to scrap the vehicle registration tax, Statistics Canada noted.