Are energy prices keeping inflation high?
BNN Bloomberg
A new report makes the case that the post-pandemic shock to energy prices is contributing to sticky inflation in Canada, as elevated gasoline and trucking costs trickle down from businesses to consumers.
Alberta Central Chief Economist Charles St-Arnaud published research this week that looked at economic effects from the 2021 to 2022 surge in oil prices, which he described as “the fastest and sharpest surge in gasoline prices in recent history” with a bigger inflationary impact than the oil shocks of the 1970s.
While gas prices have dropped since last year, they are still 30 per cent higher than pre-pandemic levels, the report said, “leading to important spillovers to other prices in the economy” – notably in transportation, with trucking freight costs “about 25 per cent higher.”
St-Arnaud told BNN Bloomberg on Wednesday that this has a major impact on prices of other goods and services in Canada because the country’s vast geography means businesses must for pay for transportation across long distances.
