Forget the 8.1%: Here's why inflation has already peaked — maybe
CBC
New data from Statistics Canada this week showed that the cost of living continues to go up at the eye-watering pace of 8.1 per cent in the year up to June.
Anyone who's filled a gas tank or a shopping cart recently knows how the price of just about everything is going up fast right now, but a peek beneath the headlines suggests there are some reasons for cautious optimism that we may already be over the inflationary hump.
Food prices have increased at a breathtaking pace recently, with prices up 8.8 per cent since last year, according to Statistics Canada. But that's actually the same annual pace of increase as it was the month before, and grocery store prices were in fact down from where they were in May. That's the first time we've seen that since April 2021.
The retail price of meat is now less than it was in April, and fruit and vegetable prices have fallen for two months in a row, according to the national statistical office.
So it may not feel like it when you're scanning your receipt at the checkout, but there are legitimate reasons to hope we may be starting to see some relief.
"I actually think that we're starting to see the end of the food inflation tunnel," said Sylvain Charlebois, a professor in food distribution and food policy at Dalhousie University in Halifax. "You can feel that we peaked in June, or perhaps even earlier.
"Food prices will rise — don't get me wrong — but the pace with which prices are rising will slow down as we end 2022."
Hard though it may be to believe, Statistics Canada calculates that a slew of products and services as varied as men's clothing, car insurance, digital equipment like computers and non-alcoholic beverages were cheaper in June than they were in May.
Many consumers may not be feeling those savings because people don't tend to spend a lot of money on them very often, as opposed to something like food, where price increases tend to irk consumers so much because they buy it so frequently.
That's the case for gasoline prices, too, and there's reason for hope on that front as well.
Sure, pump prices rose by 54.6 per cent in the past year, but much of that annual increase happened in early 2022, when Putin's invasion of Ukraine sent oil markets into turmoil as the world scrambled to find alternatives to sanctioned Russian crude oil.
The price of a barrel of crude oil was below $70 US a barrel as recently as December, before it spiked to as much as $123 US in March. Today, it's trading at about $100 US, and while it is likely to be a factor in inflation for the rest of the year, there's a growing belief that oil prices may already have peaked — at least in the short term.
Drivers were shocked when the average retail cost of gasoline topped $2.14 a litre this spring. But it's come down along with the price of oil to $1.86 on average across the country and is expected to slide further still this summer.
Half of the monthly increase in the headline inflation rate came from gasoline alone, so if that has changed direction, the inflation rate should soon do the same.
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