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Inflation jumped 8.1% in Canada

Consumer prices continued to rise in Canada in June 2022, where inflation hit 8.1% year-over-year. This is the strongest annual increase observed since January 1983, according to the latest Statistics Canada data released on Wednesday.

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However, this result remains “lower than the consensus forecast of 8.4%”, according to the analysis of Randall Bartlett, senior director, Canadian economy at Desjardins.

“At 8.1%, year-on-year price growth hit its fastest pace since January 1983, when Hall & Oats’ ‘Maneater’ was on the radio on repeat. However, even at this pace, CPI inflation in June was below expectations, and there are even some signs of a cooling there,” added the expert.

Excluding gasoline, the Consumer Price Index (CPI) rose 6.5% year over year in June in Canada, surpassing the 6.3% rise recorded a month earlier. Between May and June, the CPI increased by 0.7%.

According to Statistics Canada, price increases remained widespread, although the acceleration in growth in June was mainly due to higher gasoline prices.

Thus, seven of the eight main components rose by 3% or more. Food, for example, increased by 8.8% between June 2021 and June 2022. The other components are housing (+7.1% year-on-year), current expenses and furniture (+5 .6%), clothing and footwear (+2.7%), transport (16.8%), health and personal care (3.9%), leisure (+6.2%) and beverages, tobacco and cannabis (+3%).

Year over year, Canadians paid 54.6% more for gasoline in June, after paying 48% more in May.

According to data from the federal agency, the price index for the purchase of motor vehicles also rose (+8.2%) year-on-year in June. “Demand for motor vehicles continues to outstrip supply due to continued shortages of semiconductor chips, putting upward pressure on prices,” it said.

Statistics Canada also notes that travel-related services are costing more, due to the easing of public health measures and the rise in tourism. The price of plane tickets notably increased by 6.4%, between May and June 2022, while accommodation cost 49.7% more than in June 2021.

In Quebec, the CPI rose 8% year over year in June. On a monthly basis, it increased by 0.7%, between May and June.

The federal Conservatives blamed the Liberals, who “continued to spend out of control, in addition to making life less affordable for Canadian families in the process.”

“Even though economists say the Trudeau Liberals can directly reduce inflationary pressures by cutting government spending, on the contrary, with their NDP partners, they doubled new spending, continued to blame global factors for inflation, while refusing to take responsibility for their failures at home,” they said in a statement Wednesday morning.

While the Conservatives are calling for the government to cut spending to curb inflation, the New Democrats believe the government is not doing enough to help those directly affected by the cost of living.

“Inflation is not caused by workers, and they should not pay the price,” Jagmeet Singh said in a statement Wednesday.

“Rising wages are not the cause of inflation, it is excessive profits and corporate greed that drive up costs. Large grocery chains, oil and gas companies and big box stores are making fortunes on the backs of working families by taking advantage of global crises to justify exorbitant prices.”

Last month, Finance Minister Chrystia Freeland unveiled an $8.1 billion plan of measures to help the most vulnerable Canadians fight rising costs.

Among these measures, Ms. Freeland highlighted the one-time $500 check provided for nearly a million tenants across the country, as well as the improvement of several federal aids, such as the Canada Workers Benefit, as well as the indexation of other benefits to inflation.

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