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Inflation rate slows to 6.3% — but groceries are still going up at nearly twice that pace

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Canada’s annual inflation rate eased to 6.3% in December, the lowest level since February.

Statistics Canada reported Tuesday that the slowdown in the cost of living was largely due to a 13% drop in gasoline prices, marking the biggest one-month plunge since April 2020.

Average gas prices across Canada are only 3% higher than they were at this time last year, before Russia’s invasion of Ukraine upended global oil markets.

Canadians may have taken some comfort from higher prices every time they filled up their cars last month, but the same can’t be said for the price of stuffing their shopping carts with food.

Food prices rose another 0.3% in December, up 11% year-on-year. This is a slight slowdown from the previous month’s pace of 11.4%, but prices for many groceries, especially fresh vegetables, are still rising, rising 13.6% over the past year.

higher food cost

Kara Manovic, a shopper in Toronto, says she’s noticed a spike in prices on everything lately.

“I just take the approach that there’s not much I can do…we all have to eat,” she told CBC News in an interview. , I think it should be rolled back with a punch.”

In Burlington, Ontario, about an hour’s drive away, Rick Squires sits front row with soaring food prices in and out of his business every day. He is General Manager or Roseland Produce. He is a food importer that ships fresh produce throughout Southern Ontario.

Leslie Ekino, owner of Annabelle’s Kitchen in Calgary, said rising food prices are making her razor-thin profit margins even smaller than usual. (Anis Heidari/CBC)

From labor costs to skyrocketing transportation costs, his costs across the board have averaged about 30 to 40 percent higher than pre-pandemic, he said.

However, some things are worse than others. A year ago, he could get his lettuce romaine from California or strawberries from Arizona for his $35. Today, the same case would cost him $50. Before the pandemic, these two items may have cost him less than half what they do now.

While some consumers are waiting and hoping for prices to drop again, Squires worries that the current high levels of agricultural produce could become the new baseline.

“$25 for a case of strawberries. Never again,” he said. “We can enter a new normal for agricultural prices.”

View | Economists say on inflation outlook:

Lower inflation rate ‘encouraging’, says BMO executive

A fall in Canadian inflation to 6.3% in December will help the Bank of Canada find a path towards its 2-3% target range, said Earl Davis of BMO Global Asset Management. .

Calgary restaurant owner Leslie Echino is similarly concerned. According to the owner of Annabelle’s Kitchen, the cost of ingredients such as flour and oil has skyrocketed this year.

“Canola oil is about $4 a liter, which is three times the price of gasoline,” she said in an interview with CBC News on Monday.

She knows she can’t pass on all these additional costs on a dollar-by-dollar basis because she’ll lose customers, so her already paltry profit margins will only shrink.

“When food costs go from 19 percent or 20 percent to 30 percent, it sucks. That’s a lot of money,” she said.

“We do everything we can and try not to tell too much about it.”

Other cost mitigation

Overall, the cost of living decreased by 0.6% on a monthly basis from November to December. This is the biggest monthly drop since 2020 and enough to push Canada’s official inflation rate down to its lowest point in almost a year.

But that’s more than double the upper end range the Bank of Canada wants, and economists are likely to raise the benchmark rate at least one more time when the central bank meets next week to decide monetary policy. This is the reason why I expect .

“Core inflation is still too high, but things are improving,” said CIBC economist Karine Charbonneau. “Overall, the report is broadly in line with expectations and, therefore, the Bank of Canada continues to expect a 25% rate hike. [points] Next week we will be pausing for the rest of the year. “

Watch | Is Inflation Changing How You Shop?

Is Inflation Changing How You Shop?

New figures from Statistics Canada may indicate inflation has fallen to 6.3%, but Toronto shoppers tell CBC News that prices are still high everywhere.

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