A plunging loonie continues to lift prices at the checkout, and with the dollar plumbing new lows that trend isn’t likely to fade in the near term, experts say.
Inflation numbers for November released this morning by Statistics Canada showed a pop in consumer prices to a one-year high, largely because of – you guessed it – the falling loonie, which is stoking the cost of almost everything brought into the country higher.
But supermarket prices are feeling the pressure most acutely. “The plunging loonie is juicing food costs,” Bank of Montreal economist Sal Guatieri said.
Supermarket prices rose 3.7 per cent last month compared to November 2014, led by rising costs for produce, which saw prices climb 8 per cent last month, and meat. Meat prices rose at a rate that was a tick shy of 4 per cent – still higher than headline inflation but well down from the double-digit jumps consumers were seeing earlier in the year.
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Other products brought into the country are feeling the effects as the loonie’s descent drags on. The cost of clothing is ticking higher, with price inflation in the category rising to 2.1 per cent last month, continuing the recent trend breaking a more than decade-long disinflationary pattern for clothing costs amid a strong Canadian dollar and falling costs for garment makers.
“Clothing is a category that has frequently been in deflationary territory over the past 15 years, but has been seeing rising prices since the value of the loonie plummeted,” TD economist Leslie Preston said.
Roughly 80 per cent of the produce and meat sold through Canadian supermarkets annually is imported and subject to currency pressures. Experts suggest the dollar – which is hovering around lows last seen more than a decade ago – will remain low through next year.
That will keep prices growing at grocery stores at a pace well above headline inflation, experts predict.