Canada’s Consumer Price Index was up 4.8 per cent year-over-year in December, which according to Statistics Canada is the highest rate since 1991.
And some of the biggest drivers, including gasoline and food prices, aren’t expected to start coming down anytime soon, experts say.
“If you think it’s high now, unfortunately we do expect more increases,” says Patrick De Haan, head of petroleum analysis at GasBuddy.
De Haan says petroleum supply has not yet caught up to demand, which is on the rebound after many in North America stopped driving as much due to the pandemic and subsequent lockdowns.
“The high prices that we’re expected will eventually incentivize more oil production from Canadian producers, from U.S. producers and from OPEC (Organization of Petroleum Exporting Countries), but that production probably won’t help a whole lot or come online until later this year.”
By the end of 2022, gas prices may be back down to where they are presently, De Haan says.
Statistics Canada reports the price at the pump was up an average 33.3 per cent in December compared to the same time last year.
Food prices were also on the upswing to close out 2021, and in many cases that trend will continue into this year, thanks in part to supply chain disruptions and the vaccine mandate for truck drivers, according to Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University.
“We are expecting prices to go up in the produce section in particular,” Charlebois says.
“We actually import well over $26-billion worth of food from the U.S. each year. That’s $72-million a day, and 70 per cent of that goes through the border on wheels. So at some point you have to accept the fact that it will cost more in that section of the grocery store.”
On the flip side, Charlebois says the price of some domestically-produced foods, such as meat and eggs, will plateau this year after climbing through the latter half of 2021.
He also expects the price of rice and chocolate to hold steady.
“So generally speaking, there are some deals, but because of supply chain woes, grocers are going to be discouraged to present promotions,” Charlebois says.
To help keep the grocery bill down, Charlebois suggests people head to the store a bit more often, but buy fewer items.
“Supply chains are so inefficient right now, the shelf life of the products that reach the market is lessened, and so you may end up throwing (away) a lot of food for nothing,” Charlebois says.
With prices climbing in most sectors, Craig White with Endeavour Wealth Management encourages people to take a fresh look at their budgets.
“Prioritize is really the key,” White says.
“If inflation is causing the price of housing and fuel to go up, well, that might have to take away from some other things that are more discretionary.”
For those considering bigger purchases, such as appliances or vehicles, White says it may be a good idea to go through with it now, rather than waiting.
“You could try and wait, you know, six months and see if things cooled down a bit, but it’s just as likely to go the opposite way,” White says.
“I would encourage people to just do what they need to do and not try and predict what inflation is going to do in the future.”
That said, White is optimistic the inflation rate should normalize in the latter half of the year, providing people are able to head back to work and supply chain disruptions settle down.