By Momal Khan
Canada’s inflation rate has been driven higher and higher over the past couple of months, with a jump of 0.7% in October- the fastest that the consumer price index has risen in a long time.
Statistics Canada’s report from October says that food inflation has gone through the roof, with fruits and vegetables leading the way for the increase. The price of lettuce, in particular, has risen 25% compared to the same time last year, with experts citing diseases and bad weather in the areas it grows as being the main reasons for its supply issues.
Potatoes, carrots, and beef have also seen similar rises. This is a phenomenon that has unfolded in plain view; prices listed in stores now compared to at the start of the pandemic are visibly higher for most essential grocery items.
Over the past decade, food inflation rates have surpassed general inflation by an average of almost 23% across Canada. According to Dalhousie University professor Sylvain Charlebois, this is a problem because Canadians are being asked to pay more for food in relative comparison to their income.
Grocery chains and corporations have been announcing higher than normal quarterly profits over the past year, and food has become a commodity. The country’s three largest grocery chains- Metro, Loblaws, and Sobeys- each reported significant increases in profits compared to the same time last year, which has caused an uproar among food advocacy groups calling these corporations out for profiting off of a pandemic.
Meanwhile, many Canadians are struggling to put food on the table for their families amid a devastating economic downturn. The Daily Bread Food Bank has reported a 5% increase in food bank visits over the past few months.
In a statement to the press, The Toronto Food Policy Council has said that these grocery chains should play their part in combatting the effects of the economic downturn by bringing back pandemic-pay for its workers and collaborating with local organizations to improve food accessibility for communities that are struggling.
“It is important to note that the government needs to play a big role in monitoring and steering the private sector through policies that help address the inequalities we are seeing during the pandemic and beyond,” said the Council in their statement.
Economists had initially forecasted a year-over-year increase of 0.4%, so the 0.7% figure came as quite a surprise- it was the sharpest increase the country has seen since June. However, CPI inflation is largely expected to stay below the Bank of Canada’s target range of 1 to 3 percent until early 2021.
The Bank of Canada expects the country’s economy to grow up to an average of 4 percent in 2021 and 2022. It is expected that growth will most likely be staggered as domestic demand will largely be driven by developments of the virus as well as its impact on consumer and business confidence.
Douglas Porter, the chief economist at BMO, has said there will be a “tug of war” on prices as businesses try to balance increasing public-health measure costs while also combatting depressed demand.
“We’ve got a real push-and-pull on the inflation front,” Porter said, “we tend to believe that what is dominating and what will dominate overall is the underlying weakness in the economy and that will tend to keep a lid on overall inflation.”
As the Christmas shopping season is already underway and retailers prepare for an influx of shoppers, the economic situation is still not expected to get much better. However, the 0.7% rate is still much lower than the country’s ideal zone of 2%. This might require the Bank to allow stimulus to remain in the economy for some extended time until the rate floats back up to desired levels.
Last month, the Bank predicted annual inflation would be 0.6% this year, 1% the next, and 1.7% in 2022. The earliest the bank expects that the economy would be able to comfortably handle higher rates is not until 2023.
Photo by nrd, Unsplash