Inflation woes have Canadians exasperated, furious and invigorating

Article content

Like the millions of Canadians sourcing or spending, Neil Bascombe can barely hide his frustration at rising prices.

Article content

“They keep going up and up. And then they relax a little bit, and then it just keeps going up. $ 1.50 even for the diesel, ”Bascombe said from the pumps.

With inflation at an 18-year high, filling your Volkswagen with diesel is an exercise in disbelief.

“It’s crazy,” he raged.

“They are ripping us off. It is an organized crime movement. Gas, why does it go up on Thursdays and Fridays of every long weekend? It is a scandal and nobody has the balls to call it “.

Toronto fruit stand owner Mario Aricci calls inflation the way he sees it: “It’s ridiculous and there seems to be no way to stop it.”

Aricci says he can only raise prices so high before risking bleeding customers out of competition.

“The profit margin is contracting. And if I raise my prices, there are six other vendors in this building that sell the same product. I am going to lose. People will go shopping elsewhere. “

Article content

In addition to not fully recovering its pre-COVID number of clients, it says the lack of American tourists affects the bottom line.

Intense price pressure is seeping down the grocery aisle and onto restaurant menus.

“Beef and poultry. They have risen 7.5% to 10% in the last few months, ”said Greg Batter, director of La Fenice restaurant on King St. W.

“After the last 18 months of closures and gastronomic restrictions, a restaurant cannot absorb much and prices are going to go up. But I know our guests have felt the impact of the sticker everywhere too, so I’m doing my best to communicate to them how necessary these price increases are. “

Garima Talwar Kapoor, director of policy and research at Maytree, an anti-poverty think tank, said people with higher disposable incomes may simply forgo some restaurant outings if inflation remains high.

Article content

The options would be harsher for those with low or fixed incomes whose earnings have remained stagnant, he said, meaning their purchasing power declines as prices rise faster than wages.

“Your ability to manage your disposable income is getting more and more strict, and you are not giving up a good dinner, but actually you are giving up a meal, you are giving up prescription drugs and necessities like that,” Talwar Kapoor said. .

September marked the sixth consecutive month that headline inflation was above the Bank of Canada’s target range of between one and three percent, something that has not happened since a six-month period that ended in March 2003.

Among economic experts, there is much discussion about whether this inflationary episode is temporary – “transitory” – or has some staying power.

Article content

“The bottom line for us is not that inflation will stay extremely high forever. We believe inflation will eventually normalize, ”RBC chief economist Eric Lascelles said this week. “We think it will be a little less hot next year. But I don’t think we’ll see full normalization in 2022. It’s going to take a little longer. “

“Energy costs are contributing a lot to inflation right now. So oil has risen a lot; it costs more than $ 80 a barrel. “

“Food prices were even higher than the heady number we had recorded, with meat prices leading the way. That strength reflects the gains seen in the US, ”wrote Royce Mendes of CIBC Capital Markets.

“The headline inflation rate is also likely to remain above 4% for longer than we had anticipated, particularly with the recent rise in commodity prices and disappointing supply chain news.”

Article content

Clogged supply chains have led to shortages and price spikes for everything from shipping containers, electronic chips that handle everything from toys to cars, natural gas, and truck labor.

Mendes also wrote that the Bank of Canada will likely continue to view these price levels as temporary increases.

The traditional way to curb inflation is to raise interest rates.

But that would burden Canadians with higher borrowing costs for things like credit cards, lines of credit, and mortgages.

Bank of Canada Governor Tiff Macklem has said there would be no rate hike until the end of next year, but there are growing expectations that the central bank won’t wait that long, TD senior economist James Marple said.

“The takeoff may not come as soon as market prices currently are, but risks are certainly moving sooner rather than later,” Marple wrote.

The Bank of Canada is scheduled to make its next interest rate announcement on October 27.

This is what happened in the provinces (the previous month in parentheses):

Newfoundland and Labrador: 4.4 percent (4.8)

Prince Edward Island: 6.3 percent (6.3)

Nova Scotia: 5.2% (5.1)

New Brunswick: 5.1 percent (4.7)

Quebec: 5.1 percent (4.4)

Ontario: 4.4 percent (4.0)

Manitoba: 4.7 percent (4.4)

Saskatchewan: 3.3 percent (2.9)

Alberta: 4.0 percent (4.7)

British Columbia: 3.5 percent (3.5)