Inflation proves deflating

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This article was published 20/01/2022 (1338 days ago), so information in it may no longer be current.

Chance Qian is keeping a close eye on prices and driving a hybrid, as inflation takes a bigger and bigger bite out of Canadians’ spending power.

The 34-year-old Winnipegger, shopping at Walmart Wednesday, is reacting to the reality of a 4.8 spike in prices nationally and 4.7 per cent spike in Manitoba from December 2020 to December 2021. Driving a large chunk of that increase has been, well, driving. Gas prices spiked by an average of 33.3 per cent over the same time.

“I’m just trying to figure (out) which (items) will be the cheapest price,” Qian said, adding he traded his gas-powered car for a hybrid in November as prices skyrocketed. “I just wanted to save gas,” Qian said, adding the new ride also cuts back on carbon emissions.

Statistics Canada reported Wednesday that December’s jump was the largest since September 1991.

Qian isn’t the only one counting pennies. Yolande Delorme, 77, scours for supermarket sales online.

“I like to buy a lot of chicken and meat… but I don’t buy too much of it because it’s very expensive,” Delorme said.

When she finds a good deal — like the two whole chickens for $10 special she found Wednesday — she stocks up.

Canadians paid an average 5.7 per cent more for groceries last December than the same time in 2020. Apple prices rose 6.7 per cent, and overall fresh fruit costs increased 5.6 per cent.

Meat saw a 4.3 per cent price rise throughout 2021 after increasing 4.5 per cent in 2020. Dairy products jumped 2.8 per cent and 2.5 per cent last year and the year prior.

“Every day it seems it’s another thing,” Delorme said.

Ed Cantor, the owner of Cantor’s Quality Meats and Groceries, watched product invoices grow more expensive throughout 2021.

“If you don’t raise the cost up, you’re going to lose money,” he said. “You just can’t keep the price the way it was before — you won’t be in business very long.”

He said he tells customers to buy items when they’re on sale because he doesn’t know if the prices will inflate.

“Our meat products, it’s week to week. It’s like the stock market,” he said. “The price could change any time.”

Generally, shelter prices (housing and rent combined) increased 5.4 per cent nationally last December.

Canadians paid 7.2 per cent more in December 2021 than 2020 when buying vehicles. Household appliances cost 8.9 per cent more, on average; fridge and freezer price tags ballooned 13.9 per cent.

“Everything sort of boils down to supply and demand,” said Stefan Dodds, an economics associate professor at the University of Winnipeg.

A plethora of supply chain issues, from labour shortages to snarls at major ports, have caused disruptions of goods. Meanwhile, people stuck at home with perhaps more savings than usual have been looking to buy.

COVID-19 struck when interest rates were already low, Dodds said. But, lenders haven’t raised the rates over concerns of a collapse in demand while the pandemic — and its partner, uncertainty — rage on.

“(It’s) poured fuel on the fire,” Dodds said, adding higher interest rates will drive demand down, steadying prices with it.

The Bank of Canada has hinted it will raise interest rates this year. However, things could change if the virus takes new turns, Dodds said.

People whose wages don’t increase with inflation are the most affected, as are those who don’t have a hand in the stock market or own a home, Dodds said.

“You’re basically just getting poorer,” he said.

Last month, average wages rose 2.6 per cent while general inflation increased 4.8 per cent, compared to December 2020.

The Bank of Canada monitors what people expect of the future: if all employers start paying staff more to match inflation, and their cost of services increase, it’s a “self-fulfilling prophecy” fuelling inflation, Dodds said.

The Bank of Canada is scheduled to make a rate announcement next week, according to the Canadian Press.

gabrielle.piche@freepress.mb.ca