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Winnipeg Free Press - PRINT EDITION

Beefed-up meat prices hit Manitoba

Up 22.6 per cent over last year; rising inflation not expected to affect interest rates

By: Julian Beltrame and Martin Cash

Posted: 02/18/2012 1:00 AM | Comments: 0 (including replies)

It's perhaps lucky we don't fill up on steak sandwiches as much as we fill our cars with gasoline, or the Canadian inflation rate would have popped even higher than the 2.5 per cent it hit in January.

Manitoba's inflation rate in January came in slightly lower than the national rate at two per cent -- the lowest it's been since January 2011 -- but you wouldn't know it by looking at your grocery bill.

Statistics Canada reported Friday beef prices are up 22.6 per cent over the past year in Manitoba and bread prices are up close to 10 per cent.

Michael Degagne, co-owner of Miller's Meats on Grant Avenue, figured beef prices have risen even more than that.

Lucky for him, the higher prices have not stopped his customers from buying some of those choice cuts, he said.

"Prices have been crazy this year," Degagne said. "Beef prices always go up and down during the year, but the last year-and-a-half prices stayed strong through the winter. Usually by January and February things have bottomed out. If this is the bottom, look out for the summer."

A one-month hike in gasoline prices propelled Canada's annual inflation rate up two notches in January, reversing a recent trend toward moderating consumer price increases.

Pump prices climbed 2.8 per cent nationally last month -- 3.2 per cent in Manitoba -- partly due to political instability in the Middle East, contributing to upward pressure on both the monthly and annual indexes tracked by Statistics Canada.

The agency said consumer prices overall were 0.4 per cent higher -- 0.3 per cent higher in Manitoba -- in January than they were in December, partly reversing the prior month's sharp 0.6 per cent decline.

As well, underlying core inflation -- which excludes volatile items such as some fresh food and gas -- rose to 2.1 per cent, one tick higher than the Bank of Canada's target.

But analysts said the uptick was a temporary phenomenon and unlikely to sway Bank of Canada governor Mark Carney from his low-interest-rate policy.

They had expected the monthly and annual measures to rise, largely on what was already known about gas prices, although not as sharply as occurred.

"Taking the downside surprise in prices for December, along with the high-side surprise today, pretty much brings us full circle to where many expected inflation to be at the start of the year," said Douglas Porter, deputy chief economist with BMO Capital Markets.

Keeping inflation in check is the top priority of the Bank of Canada, but Carney has exhibited a willingness to let the measure float above his two per cent target for most of 2011.

That isn't likely to change when the central banker must next consider his super-low one per cent policy stance on March 8.

CIBC economist Emanuella Enenajor said the central bank believes inflation is due to moderate and appears more concerned about the weak state of the Canadian economy, projected to grow a tepid two per cent this year.

"With growth in Canada lacklustre, and with inflation set to trend down measurably in the months ahead, today's print should have little policy implications," she said in a note to clients.

Scotiabank's Derek Holt agreed, noting the "smoothed trend" on price hikes is heading south. Inflation spiked in March last year, so there should be a corresponding correction this spring.

The inflation reading also had little appreciable impact on the Canadian dollar, which remained above parity for most of Friday.

-- The Canadian Press / staff

Republished from the Winnipeg Free Press print edition February 18, 2012 B4

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