Canadian Inflation hits 8.1 per cent, a forty year peak

Canada hit a 40 year peak inflation rate of 8.1 per cent in June, much higher than the 2 per cent target that the Bank of Canada aims for. The last time Canada saw such a spike was in 1982, when inflation hit 10.8 per cent.

Following the 80s, the inflation rate was relatively steady until the beginning of this year, when life began to pick up again post-pandemic and people were once again driving to work, booking flights and vacations, and travelling on cruise ships.

Industries were unprepared for the shift back to normal life and demand quickly began to exceed supply, creating rising prices that wages were unable to keep up with. The Russian invasion of Ukraine interfered with global supply chains and also played a major role in driving up prices, particularly in energy and agricultural sectors.

Canadians have experienced the effects of inflation in the past year through the growing prices of gas and many basic food items. The price of a litre of gasoline in Vancouver hit record highs, capping out at $2.42 per litre in September.

Grocery prices have been rising at the fastest pace since 1982, and are up 10.8 per cent this year according to Statistics Canada. In a survey done by Dalhousie University, many people have reported that they are using loyalty points much more often, visiting discount stores, reducing their spending on luxuries and major purchases, and have even started growing their own food.

Some Canadians have also been forced to turn to debt to keep up with paying bills and covering living expenses. A report by credit bureau Equifax Canada showed that in the third quarter of 2022, credit card debt rose to its highest level since 2019.

“Overall consumer debt is on the rise,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada to CBC News.

Since June, the inflation rate has slowly begun to decelerate. In September, the inflation rate was at 6.9 per cent, with consumer prices for recreation, education, and transportation and gasoline slowing.

The increase of gasoline prices in September was 8.9 per cent, much lower than the previous 22.1 per cent increase in August. Costs for food, beverages, and housing still continue to increase.

In the effort to solve the current inflation crisis, the Bank of Canada has raised their policy interest rate six times since March. The policy interest rate is the amount banks are charged for short term loans.

The federal government is also implementing policies and directives to help combat inflation. In September, Prime Minister Justin Trudeau announced an affordability plan with a budget of $4.5 billion and a goal to provide low-income families with relief from high inflation. Actions in the affordability plan include doubling the Goods and Services Tax Credit, providing a dental benefit, and a housing benefit.