Canada’s inflation rate remained at 4.7 per cent in November, matching the annual pace seen the previous month.
The data point released by Statistics Canada on Wednesday morning was in line with economist expectations, tying October’s level, which was the highest inflation rate since 2003.
Inflation rates are soaring around the world right now, as the combination of central banks flooding the economy with stimulus cash, supply chain disruptions and a surge in demand for consumer goods caused prices for just about everything to rise quickly.
For comparison purposes, U.S. data last week showed that country’s inflation rate rose to an almost 40-year high of 6.8 per cent last month.
Consumer prices are heading higher at their fastest pace in decades, and so far incomes aren’t keeping pace.
Statistics Canada data shows that while the cost of living has increased by almost five per cent in the past year, incomes have only risen by about half that, or 2.8 per cent.
Economist Tu Nguyen with consultancy RSM Canada said wages should start to catch up soon, though.
“There is usually a time lag between inflation and wages, with the latter being stickier and taking longer to shift. However, with the tight labour market, and wages already increasing substantially for job hoppers, we will soon see rising wages to match inflation,” she said.
The data agency says higher prices for gasoline, furniture and food were the biggest factors pushing up the annual consumer price index.
Gasoline prices rose by 43.6 per cent in the year up to November. Grocery prices, meanwhile, rose by 4.7 per cent. That’s the fastest pace of increase since January 2015.
Prices for furniture rose 8.7 per cent amid higher shipping costs. The data agency says the introduction of tariffs earlier this year may have contributed to the increase in prices for upholstered furniture, which were up by more than 11 per cent compared to what they were a year ago.
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Surge in consumer demand
Retailer Andy Shields, who runs outdoor store Canadian Wintersports in Thunder Bay, Ont., has noticed the surge in demand first-hand and says it’s impacting what he has available to sell and how much he can sell it for.
Like many businesses, demand cratered in the early days of the pandemic, but then came roaring back.
“Demand skyrocketed going into the ski season, so it was just panic mode,” Shields said in an interview with CBC. “It’s been pedal to the metal in the outdoor sports industry.”
He’s managed to hold the line on prices as best as he can so far, but he predicts big hikes to come as he’s forced to pass on added costs such as the higher shipping costs he’s seeing from his suppliers.
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“We haven’t seen inflation hit us yet, [but] it’s coming,” he said. “It’s going to be probably like 10 to 15 per cent price increases on our end going into next season.”
Frank Howard, who runs tire shop Taunton Tire in Oshawa, Ont., says he may have to raise his prices by the same amount soon.
He says that in the near future, he expects to see increases from tire manufacturers anywhere from 10 to 15 per cent. “So again, that’s going to really affect the consumer and cost as well.”
Economist Clair Fan with Royal Bank says given recent developments, high inflation is expected to stick around for a while longer.
“Further disruptions to supply chains and energy markets from Omicron and the B.C. flood later in November are expected to add to price uncertainties in the near-term,” she said.