Fastest Rate Of Inflation Increase In 31 Years

Thursday, April 21, 2022 at 6:15 AM

By Meg Poulsen

The annual rate of inflation hit 6.7 percent in March, the fastest year-over-year increase in the consumer price index in over 31 years, Statistics Canada said Wednesday.

The increase compared with a gain of 5.7 percent in February and was the highest reading since inflation hit 6.9 per cent in January 1991 when the GST was introduced.

Fueling much of the increase in March were higher prices at the pumps as gasoline prices rose 39.8 percent compared with the same month one year earlier.

Stats Canada said the consumer price index would have been up 5.5 percent year-over-year if it had excluded gasoline from its calculations, suggesting far broader price pressures.

The agency said prices were driven higher in March on the back of the country’s hot housing market, supply-chain constraints and the war in Ukraine that has affected prices for oil and food.

Stats Canada said homeowner replacement costs, which includes prices for new home prices, rose 12.9 percent year-over-year in March.

Grocery store prices rose 8.7 percent year-over-year, the fastest annual rate since March 2009, aided by the largest annual increase in dairy and egg prices since February 1983.

Russia’s invasion of Ukraine was also blamed for jumps in pasta prices and cereal, the latter rising at the fastest annual pace since June 1990. Russia and Ukraine are major wheat exporters.

As prices rose faster on an annual basis in March, average hourly wages were up by 3.4 percent, still far behind inflation.

Last week, the Bank of Canada increased its key policy rate by half a percentage point, raising the benchmark interest rate to one percent with warnings that more rate hikes are to come this year.

Rising interest rates are expected to encourage saving and curb borrowing and spending, helping cool Canada’s housing market and the cost of goods. As demand goes down prices tend to rise more slowly, or even edge down – easing inflation.