OTTAWA (CU)_After years of relative stability, inflation in Canada has been on a roller coaster ride during the pandemic, with rates plunging in 2020 amid economic uncertainty involved with the global health crisis, before bouncing back in 2021 imbalances in demand and supply, as well as record-low interest rates. Now the country is grappling with a record high inflation, which has gone up faster than the government and economists had anticipated.
Figures published by Statistics Canada on Wednesday show that inflation rate rose to 6.7 per cent in March, a full percentage point higher than the previous month when it was already at a 30-year high. The price hike was registered across all eight categories of the economy that the national statistical office tracks, from food and energy to transportation and shelter costs. “The spike in prices over the month of March is the largest monthly increase since January 1991, when the goods and services tax was introduced,” Royce Mendes, an economist from Desjardins Group, noted.
However, Canada is not the only country grappling with consumer price pressures. In the US, the inflation rate jumped to a 40-year high of 8.5 per cent in March, while in the UK, it has risen to 7 per cent, the highest rate in three decades.
While the price hikes have are spread across different sectors of the economy, transportation costs are leading the way, with an annual increase of 11.2 per cent. This is largely owing to a 39.8 per cent rise in gasoline costs since March last year. Last month, Gasoline prices skyrocketed in response to geopolitical tensions in Eastern Europe which threw global supplies into chaos. At one point, average price for a litre of gasoline in several Canadian cities reached $2 for the first time ever, although prices have dropped slightly since then.