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Canadian inflation hits highest annual level since 1991

·2 min read
TORONTO, ON - DECEMBER 23: Inflation has an affect upon the economy whether its interest rates, mortgage rates, gas prices or any other thing we require as a good or service. CORONAPD  Toronto Star/Rick Madonik        (Rick Madonik/Toronto Star via Getty Images)
Inflation affects the economy whether it's interest rates, mortgage rates, gas prices or any other thing we require as a good or service. (Getty Images)

Canadians face higher prices as annual inflation continued its rise to the highest level since 1991.

Statistics Canada says the consumer price index (CPI) rose 4.8 per cent in December from the year before, matching estimates and following a 4.7 per cent increase in November. However, the agency says it saw the first monthly decline in prices since December 2020, as gas prices fell from November levels.

Wages were up 2.6 per cent during the same period, which means prices rose faster and purchasing power fell.

Prices were up in all eight major categories year over year. Categories pushing prices higher included prices for food (+5.2 per cent), passenger vehicles (+7.2 per cent) and homeowners' home and mortgage insurance (+9.3 per cent).

Grocery prices were up 5.7 per cent, the most since November 2011. Weather and supply chain disruptions pushed fresh fruit prices up 5.6 per cent, including apples (+6.7 per cent), oranges (6.6 per cent) and bananas (2.5 per cent).

Prices for bakery products rose 4.6 per cent as drought hit wheat crop yield.

Prices for durable goods also rose at a faster pace. New cars were up 7.2 per cent. Household appliances were up 8.9 per cent, including refrigerators and freezers (+13.9 per cent) and laundry and dishwashing appliances (+10.4 per cent).

Higher building costs helped push home and mortgage insurance up 9.3 per cent.

Flying was also more expensive with air fares jumping 24.7 per cent.

“A few weeks ago we may have been tempted to call a peak in inflation at this point. However, a reacceleration in energy prices, transportation issues impacting food costs and a strengthening once again in monthly house price gains suggest that we could grind a little higher still, before seeing a deceleration starting around springtime,” said CIBC senior economist Andrew Grantham

“For the Bank of Canada, headline inflation in Q4 as a whole was slightly below its October MPR forecasts, although there may be increasing concern regarding the length of time it will remain elevated for and a broadening of price pressures outside of food, energy and supply constrained items.”

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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