At the end of December 2021, the Consumer Price Index had increased by 4.8% for the year. With food costs increasing, the cost of living has risen the fastest we have seen since 1991. Statistics show grocery prices have risen by 5.7%, which is the largest gain since 2011. The two things that are mainly affecting the price of groceries would be weather conditions in growing regions and disruptions in the supply chain also due to the weather.
Just How Much Has Food Prices Increased?
Apple prices increased by 6.7%, and oranges saw an increase of 6.6%. With the United States being the major supplier of oranges, having bad weather and citrus greening in the major growing region. Orange export and production numbers have fallen their smallest since 1945. This not only affects the price of the fruit, but also the price of frozen concentrate and any commodity it is used in. We are seeing that price increase, with the cost of orange juice doubling in the last few months.
Other food prices are increasing too, such as frozen beef, which has gone up by 12% over the prices of 2021. Ham and Bacon have also increased in price by 15%.
With supplier’s costs going up, retailers have to pass on the increases to their customers. Kendra Sozinho, Fiesta Farms grocery store manager, indicates she has never seen a price jump like this one in her 20 years working for the company.
Current new rules which forbid unvaccinated truck drivers from entering the country could make price hikes more likely in the coming weeks and months.
As pandemic spending winds down, we expect to see a decrease in pent-up demand, which is one thing driving price increases. We still expect challenges in inflation and the supply chain.
What is Happening Outside the Food Industry?
Expect to see more rate hikes! Food is not the only thing that we are going to see price increases on in the future. Shelter prices have increased by 5.4% over last year, which is even higher than the overall inflation rate. Worst is that the factors pushing up shelter costs are all local Canadian problems.
Yes, domestic issues are what drives housing inflation. There is also the weather driving up insurance costs, which affects homeowners and dwellers.
Politicians Weigh In
Pierre Poilievre blamed the inflation on the federal government. He is a conservative finance critic who believes that a nation such as Canada should be able to keep prices down. Poilievre told reporters that the biggest increases we have seen on consumer products are on stuff that we source here in Canada.
He calls home price inflation a “home-grown” problem, and argues that all blame regarding the inflation should be placed on Prime Minister Justin Trudeau. He noted that the more the Prime Minister spends, the more prices go up.
Early in the pandemic, we saw lending rates reduced to all time lows. This stimulated the economy, but two years later the housing market has seen skyrocketing prices and reduced listings.
Investors Weigh In
Investors believe there is a 75% chance of a rate hike soon. While inflation is expected to come down over the year, it is necessary for the Bank of Canada to require tighter financial conditions.
If we saw any relief at all, it was with gas prices. We saw a drop of 4.1% during one month, which is the largest monthly drop since April 2020. But gas prices are still high compared to 2020 rates.
How is inflation affecting you? We’d love to hear in the comments!