Canada's inflation rate declined for a third month in a row in September, indicating the rate hike measures taken by the Bank of Canada are starting to make their mark.
However, Canadians continue to struggle financially, as grocery costs remain elevated. Statistics Canada (StatCan) reported this morning that the consumer price index declined to 6.9% in September, down from 7% in August. While the drop is a welcomed one, economists had expected a bigger drop to about 6.7%, but relentlessly high food prices kept the number up.
The inflation rate peaked at 8.1% in June, marking a 40-year high.
While it has dropped since, grocery prices are taking a notable toll on the wallet, resulting in changed consumer behaviours and financial stress. StatCan says that grocery prices rose at the fastest rate since August 1981, with prices up a staggering 11.4% compared with a year ago. Furthermore, it says food prices have outstretched the overall inflation rate for 10 consecutive months.
Minded man viewing receipts in supermarket and tracking prices
Meanwhile, gas prices -- a major driver of climbing inflation in recent months -- have cooled at the pumps (so, at least there's that). StatCan says gas priced fell by 7.4% in September from a month prior.
In order to tame elevated rates of inflation, the Bank of Canada has continued to raise interest rates since early spring. It is widely expected the central bank will increase its trend-setting rate once more next week, by at least 50 basis points; recent speeches from the Bank's top brass have indicated that while inflation is headed in the right direction, it remains too high for policymakers to take their foot off the rate hike pedal.
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Not only are these rates pushing up the cost of mortgage and credit card interests -- resulting in an increase in missed home payments -- they are keeping would-be buyers out of the housing market and putting more pressure on rental markets as a result.
So, renters in places like Toronto are now paying $2,474 for a one-bedroom apartment in the notoriously pricey city -- while paying hundreds of dollars more a year to feed themselves -- and basically kissing their dreams of homeownership goodbye for the near future.
And a recent decision to freeze prices on Loblaw's No Name products for a few months isn't going to change this reality.
