It's been nearly 20 years since inflation has been this high in Canada
Food prices a major contributor to increase
Canada's inflation rate rose to a new 18-year high of 4.4 per cent in September, with higher prices for transportation, shelter and food contributing the most to the jump in the cost of living.
Statistics Canada said Wednesday that the transportation index, which includes gasoline, rose by more than nine per cent.
Gasoline prices have risen by almost 33 per cent in the past year, the data agency said. In addition to the cost of a fill-up, a major factor in the cost of transportation is the price of a car, which is also going up at a swift pace. The data agency calculates that prices for new cars rose by 7.2 per cent in the past year.
"The global semiconductor chip shortage, leading to limited supply, contributed to higher prices in September," Statistics Canada said.
Shelter costs have gone up by 4.8 per cent in the past year, while food prices are up by 3.9 per cent.
Prices for just about every type of food went up sharply, especially meat, which rose at an annual pace of 9.5 per cent. That's the fastest pace of increase in meat prices since 2015.
Shopping for food at a grocery store in Toronto on Tuesday, Martin Rolin said price increases have pushed meat beyond his budget.
"I stopped buying beef a few years ago because it's just too expensive," he told CBC News in an interview. "I usually try to get [groceries] during sales but they're getting reduced less and less."
Chicken prices are up 10 per cent in the past year, while beef is up by more than 13. Pork is up by more than nine per cent, Statistics Canada says.
The only part of the grocery basket that's giving shoppers relief right now is fresh veggies, which have gotten 3.2 per cent cheaper in the past year.
High prices may linger
While economists had been expecting the rate to come in high, the numbers were even higher than what they were expecting. Prices for just about everything are headed higher all over the world, largely due to the pandemic, which threw supply and demand balances out of whack.
Policymakers have downplayed the threat of rising prices as being "transitory," which is economist-speak for something that is only temporary due to short-term factors. But the longer high inflation sticks around, the harder it is to dismiss as being temporary.
"Back at the onset of this, we were thinking that it could last maybe a few months or so, but now it's looking like it could linger on for some time," said Sri Thanabalasingam, an economist with TD Bank, in an interview with CBC News. "Maybe until the second half of 2022. But it's very, very uncertain right now."
If it does persist, Canada's central bank may be forced to react by raising its lending rate to cool things down. Bank of Canada governor Tiff Macklem hinted at the bank's rethink on inflation in a speech last week, noting that supply disruptions "are proving to be more complicated and they could last a little longer than we previously thought."
Economist Doug Porter with Bank of Montreal is among those who's starting to think high inflation may be sticking around for a while.
"The big picture is that inflation continues to march higher, with pressures broadening out," Porter said of the numbers. "Suffice it to say, that strains the definition of transitory."
With files from the CBC's Sam Nar