Food prices and cost of housing surge as Canadian inflation continues to rage

The cost of living has become more expensive as Canadian inflation remains high.

Statistics Canada has reported that grocery prices or the cost of food purchased from stores increased almost 10 percent or 9.9 percent to be exact in July 2022 compared to the same month last year.

The increase exceeded the annual increase recorded in June this year at 9.4 percent.

Shelter costs have also risen some more.

As an example, rent increased 4.9 percent in July this year compared with the same month in 2021.

The rent increase followed a 4.3 percent hike in June.

Overall, the Consumer Price Index or CPI rose 7.6 percent on a year-over-year basis in July.

That’s down from an 8.1 percent increase in June.

“The deceleration was a result of slower year-over-year growth in gasoline prices,” Statistics Canada reported Tuesday (August 16).

Gasoline prices rose 35.6 percent year-over-year in July, which was lower compared to the 54.6 percent increase in June.

Consumers paid 9.2 percent less for gasoline in July compared to June.

The agency noted that while gasoline prices declined on a monthly basis in July, prices for other non-durable goods like natural gas and groceries rose.

Also, wages aren’t keeping up with consumer inflation.

“On average, price increases continued to exceed the year-over-year increase in hourly wages (+5.2%) in July,” Statistics Canada noted.

As for food, prices for bakery products were up 13.6 percent year-over-year last July.

Other food items also recorded faster price growth.

These include non-alcoholic beverages, 9.5 percent; sugar and confectionery, 9.7 percent; preserved fruit and fruit preparations, 10.4 percent; eggs, 15.8 percent; fresh fruit, 11.7 percent; and coffee and tea, 13.8 percent.

“Year over year, prices for food purchased from restaurants (+7.3%) continued to increase at a faster rate in July compared with June,” Statistics Canada also noted.

The 7.6 percent annual inflation increase is way higher than the two percent inflation target by the Bank of Canada.

This means that the central bank will continue raising its interest-setting rates that in turn make mortgages more expensive.

The Bank of Canada has raised its rates four times since March 2022, causing a slowdown in the housing market.

Higher interest rates translate to more expensive housing.

“On a year-over-year basis, the mortgage interest cost index (+1.7%) increased for the first time since September 2020 amid elevated bond yields and a higher interest rate environment,” Statistics Canada stated in its report.

Moreover, higher mortgage rates could “lead to additional rental demand”, resulting in higher rents.