Canada's inflation rate reached an almost twenty-year high, as it rose from 4.1 per cent in August to 4.4 per cent in September - which spells six consecutive months in which it has eclipsed The Bank of Canada's preferred range of 1 to 3 per cent.
The hike was guided by rising gasoline prices, which have increased a whopping 33 per cent from a year ago. In addition, the cost of a new vehicle jumped 7.2 per cent. "The global semiconductor chip shortage, leading to limited supply, contributed to higher prices in September," explained Statistics Canada.
Housing rose by 4.8 per cent, while food increased 3.9 per cent. Chicken prices increased by 10 per cent this past year, while beef is up by over 13 per cent. Pork is up by more than nine per cent, noted Statistics Canada.
Though economists had foreseen a high inflation rate, numbers came in higher than what was expected. As the pandemic threw a wrench into supply and demand, pricing for basically everything worldwide is trending upward.
The Bank of Canada has held its stance on higher inflation being a temporary trend, pointing to supply-chain interruptions and contrasts to prices from a year ago. “There’s a bit more persistence than we previously thought. But when you look at it, I think there are good reasons to believe that they are temporary,” explained Tiff Macklem last week. “Our job as a central bank is to make sure that one-off increase in prices doesn’t become ongoing inflation,, What we’re really looking for is to see any signs of spreading,” he added.
CIBC economist Royce Mendes believes the central banks inflation indicators show that the economy has not fully bounced back from effects of the pandemic, which has the BoC looking at recent price increases as temporary.