Canada: Consumer Inflation Rate Reaches 30-Year High

(20 January 2022) Canada’s year-over-year inflation rate rose to a three-decade high in December, increasing chances of a hawkish turn from the Bank of Canada. Inflation has been above 3%, the upper limit of the Bank of Canada’s 1%−3% target range, since April.

• Consumer price inflation rose 4.8% in December, the largest year-over-year increase since September 1991, when it was 5.5%. The December price gain was mainly driven by the rising cost of food and housing.
• Food prices rose 5.2% in December — the fastest pace of growth since 2011 and a huge jump from the 1.1% YoY growth in same period in 2020. Higher transportation costs and continued high energy prices are putting upward pressure on food prices.
• Housing costs rose 5.4% in December, up from 1.6% last December, fuelled by rising prices for natural gas and fuel oil used for heating homes.
• Gas prices at the pump cooled down in December, with inflation dropping to 33.3% year-over-year, down from 43.6% in November.