Canadian inflation looks less transitory by the day, as costs surge higher and higher. Statistics Canada (Stat Can) data shows the consumer price index (CPI) made a sharp climb in August. Growth is now well in excess of the base effect, and not just an illusion. One of the biggest drivers has been shelter costs, which had no base effect around this period.
Canadian Inflation Made The Fastest Jump In 2 Decades
Canada’s CPI is soaring at a breakneck speed, actually hitting a multi-year high. Annual growth reached 4.1% in August, up from 3.7% the previous month. It was the fastest rate of growth since March 2003.
Canadian Consumer Price Index (CPI)
The 12-month percent change for the Canadian consumer price index (CPI).
Source: Stat Can; Better Dwelling.
Gasoline costs continue to distort the data, due to the extreme swings over the past year. When gasoline is excluded, CPI annual growth falls to 3.2% in August. It shaves off nearly a point, meaning it’s much lower than the headline number. This is still significantly above the 2.0% people have been told to expect as “normal.”
The Base Effect For Inflation Is Real, But Exaggerated
Part of the surge is due to a base effect, but it definitely isn’t responsible for all of it. This time last year, CPI was falling from prior months. It did so in both August and September. It was a 0.2 point and 0.1 point monthly decline, respectively. That’s only half of the 0.4 point increase seen last month.
Housing Costs Are One of The Biggest Drivers of Inflation
Shelter, one of the largest components of CPI, is elevated, but stalled. The annual growth was 4.8% in August, the same number as the month before. Shelter is also one of the segments not impacted by a base effect last August.
The Cost of Replacing A Home Rises The Most Since 1987
The CPI-shelter subcomponent of homeowners’ replacement costs was noteworthy last month. The area showed annual growth of 14.3% in August, the most since September 1987. Owned accommodation expenses, which include Realtor commissions, jumped a similar amount as well.
Canadian Homeowners’ Replacement Costs
The 12-month percent change for the CPI-Shelter subcomponent of homeowners’ replacement costs.
Source: Stat Can; Better Dwelling.
Canadian CPI showed higher inflation, and it didn’t quite match the tales of a base effect. A base effect did influence year-over-year growth, but it wasn’t the only reason. Costs are just rising very fast, as most of you have already noticed.
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That number is fake. Like with the US and it’s supposed 5% inflation rate, it’s actual inflation rate is around 13% based on how they used to measure inflation back in 1980 according to shadowstats. Canada’s inflation is closer to or just above 10%.
If Canada wants to save the dollar then it’s now time to jack up interest rates.
Let the good times roll!
I’m so proud of us. We did it!
Yes, the Toronto and Vancouver bubble will see the biggest crash.
Inflation for me personally has gone up +30% in my household. My ex-landlord decided to sell the house we were renting during the last housing boom (I don’t blame him) so my rent went from $2250/month to $2800/month for a single family detached house in Newmarket – and I count myself lucky.
My car insurance went up 10% from 2019 despite a perfect driving record and no factors under my control. Utilities (hydro, water, oil) all went up nominally. Gasoline is up, even from 2019 prices. Not to mention the grocery bill is at least 10% more than it was 2019/2020.
I was lucky enough to obtain a promotion and a 20% raise to my salary mid-year, which got completely wiped out by inflation and cost of living increases. I’m currently able to save about $10k/year for a down payment on a house, and at this rate, it’ll take me 5-6 years to be able to afford a $650k house, may be 2 hours drive from the GTA if I’m lucky. And I’m sure most millennials that don’t have rich parents are probably in the same boat.
Feels like we’re spinning our wheels and it really #$%@ing sucks