Stats Can reports that the annual inflation rate shoots up to 4.4% in September

The cost of putting food on the table and gasoline in the car raised the cost of living in September, pushing the annual pace of price increases to a nearly two-decade high with no clear end in sight to the high readings.

Overall, headline inflation last month was 4.4 percent, the fastest annual pace since February 2003. Statistics Canada said the annual inflation rate would have been 3.5 percent if it had excluded prices. of gasoline from your calculation.

Economists warned Wednesday that inflation readings could hover around 4 percent through the end of the year.

Much of the overall rise in the consumer price index was pump prices, with consumers paying 32.8% more last month for gasoline than in September 2020.

Overall food prices rose 3.9 percent year-on-year, compared with 2.7 percent in August, mainly due to higher food prices in stores.

Meat prices rose at their fastest annual pace since April 2015, driven by double-digit increases in chicken and beef. Bacon prices were up 20 percent.

Even the smallest critters had a huge effect: Shrimp and prawn prices pushed up shellfish prices due to supply chain issues among major exporters.

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.

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 you are actually 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 has been 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.

CIBC Senior Economist Royce Mendes said a silver lining is that consumers are collectively sitting on heaps of savings that should help them and businesses weather the inflationary storm.

“That’s the only good news we can say about inflation this time around is that the economy could handle it a little better than in previous decades,” he said.

Rising prices have been an obstacle in the global supply chain that has raised transportation costs, which are being passed on to buyers.

Bank of Canada Governor Tiff Macklem said last week that bottlenecks have proven to be more persistent than previously believed, but that recent inflation readings are “transitory” or a temporary problem.

BMO chief economist Douglas Porter said he expects inflation to average 3.3 percent this year and next due to the broad nature of price pressures, such as for new vehicles or new homes.

“Suffice it to say,” he wrote, “that strains the definition of transitory.”

Statistics Canada said that the average of the three core inflation measures, which are considered best indicators of underlying price pressures and which the Bank of Canada is closely monitoring, was 2.67 percent in September, down from 2.6 percent in August. The September average was the highest since December 2008.

Mackelm has said the bank would act if the current streak of price increases appears to turn into pressure points rather than one-off.

Steps you could take include raising the key interest rate or further pullbacks on your stimulus bond purchases. Higher rates would raise interest rates on mortgages, auto and business loans, generally cooling consumer demand.

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

Macklem has said that there would be no rate hike until the end of next year, but there are growing expectations that the central bank will not wait that long, said TD senior economist James Marple.

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

This Canadian Press report was first published on October 20, 2021.