Did she succeed in draing people"s saving in order to "kick start the economy"?While Finance Minister Chrystia Freeland recently declared Canada’s annual inflation rate of 2.8% as a “milestone moment” for Canadians, the word that better applies is that it’s still a millstone around their necks.
While it’s good news the annual inflation rate dropped to 2.8% in June from a 39-year high of 8.1% a year ago, Freeland’s boast that “it should provide a lot of relief to Canadians” is a hollow victory.
Despite the drop in the inflation rate to within the Bank of Canada’s annual inflation control target — an average of 2% within a range of 1% to 3% — there’s still a long way to go.
The main reason for the decrease in the annual inflation rate from 3.4% in May was a drop in gasoline prices.
But, as Statistics Canada also reported: “Grocery prices remain one of the largest contributors to the all-items CPI (Consumer Price Index), with a 9.1% year-over-year increase in June, nearly unchanged from the increase in May (+9.0%).
“The largest contributors within the food component were meat (+6.9%), bakery products (+12.9%), dairy products (+7.4%) and other food preparations (+10.2%).
“Fresh fruit prices grew at a faster pace year over year in June (+10.4%) than in May (+5.7%), driven, in part, by a 30.0% month-over-month increase in the price of grapes.”
When the cost of a necessity such as food is contributing to inflation, along with a 30.1%-increase in the cost of mortgage interest payments, year-over-year, it’s hardly the time to declare victory over inflation.
Finally, a decrease in the overall rate of inflation is not the same as a decrease in prices paid by Canadians.While Finance Minister Chrystia Freeland recently declared Canada’s annual inflation rate of 2.8% as a “milestone moment” for Canadians, the word that better applies is that it’s still a millstone around their necks. While it’s good news the annual inflation rate dropped to 2.8% in June from a...apple.news
It means the rate of increase in prices has slowed down, while the costs of necessities such as food continue to rise.
While Freeland also boasted that Canada’s inflation rate is the lowest in the G-7, what’s far more significant to Canadians is that the Bank of Canada has raised its key interest rate from 0.25% in March 2022 to 5.0% today, to fight inflation.
That has dramatically increased the cost of borrowing for everything from mortgages to business and consumer loans, with no indication the bank intends to lower it any time soon.