On Friday, January 12, 2024, a staff member at a Metro grocery store in Milton, Ontario, was observed organizing the halal food section. This information was captured by Nathan Denette of THE CANADIAN PRESS.
In the latest report released by Statistics Canada on Tuesday, it was revealed that the cost of food increased at a more rapid pace than the overall inflation rate in the last month. The Consumer Price Index (CPI) indicated that the year-over-year inflation rate reached 3.4 percent in December, while food prices experienced a steeper climb, rising by 4.7 percent. This mirrors the rate increase observed in November, contrary to the previous months when the CPI report had hinted at a slowing trend.
Economist Jules Boudreau from Mackenzie Investments emphasized that December witnessed a "sharp" acceleration in inflation. While a single month's robust inflation might not alter the broader trend, Boudreau asserted that it is sufficient to rule out any softening of language at the upcoming Bank of Canada meeting.
Gasoline emerged as a pivotal factor in driving headline inflation upwards for December, along with additional costs associated with airfares, fuel oil, passenger vehicles, and rent. However, the report lacked specific details explaining the surge in grocery bills.
Delving into specific food items, fruit juice experienced a notable surge, with a year-over-year inflation rate of 17.5 percent in December and a 3.5 percent increase from the previous month. Preserved fruit and fruit preparations also recorded a substantial hike, registering a 13.4 percent year-over-year inflation rate and a 1.9 percent uptick from November.
Though fresh fruit and vegetables showed increases, they did so at a comparatively slower pace. Fresh fruit had a year-over-year rate of 4.6 percent, with a modest 0.8 percent increase from November. Fresh vegetables experienced similar small increments, though the year-over-year inflation rate was higher at 8.3 percent. Frozen and dried vegetables saw a 2.8 percent inflation rate from November to December, resulting in an 11.4 percent year-over-year increase in December.
On a positive note, edible fats and oils witnessed a decrease in price from November to December, though the items still maintained a 12.8 percent year-over-year inflation rate. Conversely, holiday favorites like cookies and crackers became more expensive, with a 12.6 percent inflation rate year-over-year in December, reflecting a 2.3 percent increase from November.
While some meat products experienced a decrease in inflation rates in December, fresh and frozen beef stood out with a year-over-year inflation rate of 10.6 percent. However, certain food items witnessed declining prices, such as lettuce, which saw a significant 21.9 percent year-over-year decrease, despite a 2.7 percent increase in month-to-month prices. Tomatoes and bananas also showed annual decreases of 11.3 percent and 2.4 percent, respectively.
In summary, the latest CPI report indicates a notable acceleration in overall inflation, particularly in the food sector. The surge in prices was driven by various factors, with specific food items experiencing varying degrees of inflation. The report suggests potential implications for the upcoming decisions at the Bank of Canada.
