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B.C. businesses facing pressure to raise prices amid surging costs

Click to play video: 'Inflation forces North Vancouver restaurant to raise prices' Inflation forces North Vancouver restaurant to raise prices
A North Vancouver restaurant says it has no choice but to raise its prices by 15% this year, after holding steady throughout the pandemic. While food costs are a huge part of it, labour and gas prices are also contributing factors. Emad Agahi explains – Mar 16, 2022

As the cost of doing business climbs in B.C., some businesses are feeling forced to pass the pressure on to consumers.

Lift Breakfast Bakery in North Vancouver is among many restaurants in the province facing a slew of rising costs, including more expensive food, gas and higher wages.

Read more: Inflation is surging. Here’s how to protect your money

After keeping their prices static over the course of the pandemic, owner Fraser Young said the business made the tough call to hike prices up to 15 per cent this spring.

“Everything is up. Nothing is down,” he told Global News. “We didn’t have any price increases throughout the pandemic for obvious reasons, and (costs) continued to climb drastically.”

Click to play video: 'B.C. raising minimum wage starting in June' B.C. raising minimum wage starting in June
B.C. raising minimum wage starting in June – Mar 14, 2022

Chef Jane Young, Fraser’s wife and business partner, said customers, who stuck with the business through two tough years of COVID, have generally been understanding. They are seeing rising prices at pump and grocery store.

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“We could cut our costs down and keep the prices the same,” she said.

“But I think all of our customers realize that our food tastes a certain way because of the ingredients we use, and we’re really committed to that.”

Read more: Inflation hit 5.7% in February. Economists say it hasn’t peaked

According to B.C.’s consumer price index, the cost of food in February was up 5.8 per cent over the same month in 2021, with restaurant prices actually climbing more slowly, at 3.3 per cent.

Nationally, Statistics Canada said consumer prices were up 5.7 per cent year-over-year last month, the biggest gain since 1991.

It’s a difficult position that economists say will take a while to escape, and not without some pain.

A combination of international factors — supply chain disruptions and the war in Ukriane — along with domestic forces, such as a two-year stretch of very low interest rates and a sizable portion of the public saving heavily during the pandemic, are behind the current high rate of inflation, according to Michael Deveraux, a professor with UBC’s Vancouver School of Economics.

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Devereaux said the warning sings were present a year ago, and many observers expected a temporary jump in prices as consumer spending resumed, but the problem has proved more stubborn.

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“We have to understand that costs for everyone are going up,” Devereaux said.

“Businesses can hang on for a while and suffer an increase in costs if they think it’s just a temporary spike and they want to maintain their customer base, but the problem is this is a persistent increase in costs.”

Read more: Bank of Canada raises key interest rate, but inflation could prove ‘difficult to tame’

The Bank of Canada raised its key interest rate earlier this month, a sight Devereaux said the public should get used to through to the end of 2023 as the institution seeks to tamp down inflation.

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“That’s going to have a knock-on effect on mortgages, the cost of borrowing, credit card debt, all kinds of borrowing that people undertake,” he said.

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“I really don’t see any other way. If we let these inflation forces continue without a policy response, then down the road in order to get rid of inflation we would have to generate a very, very large recession as we did in the early 1980s, and that would have much bigger costs on the economy.”

Read more: B.C. minimum wage to go up to $15.65/hr on June 1

Back at Lift in North Vancouver, the Youngs are focused on launching a new menu and staffing up, as they aim for a spring and summer rebound now that restrictions are easing.

“It almost feels like a fresh start right now, in terms of restrictions being lifted, spring coming. We’re heading into our busy summer season,” Jane said.

“So this is a great time to revamp our menu a little and add some new things to it, freshen it up, and at the same time change prices and really explain to people this is just a pure reflection of everyday life that I think most people are aware of, because they buy groceries, they fill their cars up.”

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