Well, we were expecting it.... but it still hurts.
This morning, Statistics Canada (StatCan) confirmed what Bank of Canada governor Tiff Macklem suggested last week: Canada’s inflation rate reached 8.1% year-over-year in June.
The climb follows a 7.7% gain in May and marks the largest yearly change in inflation rate since January 1983 -- nearly 40 years ago.
According to StatCan, June’s acceleration was largely due to higher prices for gasoline, however, price increases remained broad-based, with seven of eight major components rising by 3% or more. Excluding gasoline, the CPI rose 6.5% year over year in June, following a 6.3% increase in May.
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On a monthly basis, the CPI rose 0.7% in June, following a 1.4% increase in May. On a seasonally adjusted monthly basis, the CPI was up 0.6%.
On average, prices rose faster than hourly wages, which increased 5.2% in the 12 months to June, based on data from StatsCan’s Labour Force Survey.
On a year-over-year basis, consumers paid 54.6% more for gasoline in June following a 48.0% increase in May. Prices at the pump rose 6.2% month over month in June, following a 12.0% increase in May.
The purchase of passenger vehicles index rose 8.2% on a year-over-year basis in June following a 6.8% increase in May. Demand for passenger vehicles continues to outpace supply in Canada, as a result of the ongoing semi-conductor shortage, which is putting upward pressure on prices, says StatCan.
Canadians also continued to see higher grocery tabs, with the cost of food up 8.8% compared with June last year. Among food items, the largest price hike was for edible fats and oils, which rose by 28.8% year-over-year.
Reflecting a softening of prices in the housing market in recent months, StatCan says owned accommodation expenses rose less year-over-year in June (+12.2%) than in May (+14.8%), driven by the first month-over-month decrease since August 2019. The homeowners replacement cost index also increased at a slower pace year over year in June (+10.0%) compared with May (+11.1%).
The mortgage interest cost index continued to decrease at a slower pace on a year-over-year basis, down 0.6% in June following a 2.7% decline in May, putting upward pressure on the all-items CPI, says StatCan. This was driven by the largest month-over-month increase (+1.4%) since September 1982, amid higher bond yields and a higher interest rate environment.
Meanwhile, this year's vacation will come with a steep price tag (and a potentially maddening airport journey -- but that's another story). The easing of pandemic-inspired public health measures and the increase in tourism which followed has led to higher demand for travel-related services. Travellers across the country faced higher prices for accommodation (+49.7%) compared with June 2021, with prices rising the most for consumers in Ontario (+68.0%) Prices for air transportation rose 6.4% month over month in June, following a 0.8% decline in May.
South of the border, the inflation rate in the US recently hit 9.1%. Whether or not we'll catch up to our neighbours remains to be seen, however, anything is possible in this (extremely pricey) climate.
