Inflation rates in the country are getting closer to the Bank of Canada’s target of 2 per cent, but economist are warning it is too soon to celebrate.
The numbers released Tuesday morning show the national rate tumbled to 2.8 per cent in June, down from 3.4 per cent in May. In Alberta, June inflation came in at 1.9 per cent, down from 3.1 per cent, while Calgary’s rate fell to 2 per cent from 3.5 per cent the previous month.
“A lower rate of inflation is better than a high rate,” said Ron Kneebone, economics professor with the University of Calgary’s School of Public Policy. “But I think people sometimes mistake what that means.
“They think that prices are falling, but they’re not. Prices are continuing to rise, just not as quickly as they did before.”
A decrease in gasoline prices is being pointed to for the drop in inflation, but grocery costs rose at a rate of 9.1 per cent year over year.
“You need to hope that your income is keeping up with inflation,” explained Kneebone. “For most people it’s not and so they’re falling a little bit further behind every month.”
The Bank of Canada raised interest rates earlier this month to help drive inflation down to its target range, but Kneebone says it is a long process and will take 12-18 months for the bank’s policies to take effect.
“We need to prepare for the long-term: this isn’t going to go away fast, it’s been hanging around for a while and I think it’s going to stay for a while longer.”
Prices on all food increasing
It’s not only prices at the grocery store that have been steadily increasing.
Chris Malmberg, owner of Momms Premium Pet Food, said he has seen an over 30 per cent increase in the cost of dog food over the past two years because of inflation.
“People are looking at the price point a lot closer these days,” said Malmberg. “Especially when your dog food bag has gone from $90 to $130 in the last year and a half.”
He said he tries to bring in more cost-effective options for his customers while keep the same level of quality, but he has little control over the price of pet food.
“We don’t set that price at all,” explained Malmberg. “We have an MSRP (manufacturer’s suggested retail price) so when they increase the prices, they just tell us what it is and we follow it.”
Even as inflation slows, it’s unlikely pet owners will see relief at the till. Malmberg says once the prices are raised, it’s very difficult to bring them down.
“That’s why we’re always trying to source lines that are high quality, where the price point comes down that allows our customers to still feed their dogs quality dog food while they’re worried about their own conflicts at home.”
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