BoC can look at CPI and say 'we've done our job', but can't cut rates amid Fed tightening strategist
Canadian grocery costs stayed high last month, though price growth slowed for items like meat and vegetables.
Statistics Canada said prices for food purchased from stores rose 10.6 per cent year-over-year in February, the tenth straight month of double-digit increases. Overall food prices, which include items sold in grocery stores and restaurants, rose 9.7 per cent, slower than the 10.4 per cent rise reported in January.
In its Consumer Price Index report published Tuesday, StatsCan said prices were driven up by supply constraints due to poor weather in growing regions and costs from animal feed, energy and packing.
Costs for some grocery items grew more slowly in February than January, StatsCan said, including meat with a 6.2 per cent year-over-year increase and vegetables and bakery products with a 13.9 per cent increase.
Dairy products also rose less in February, at 9.1 per cent, than in January, due largely to a slowdown after the Canadian Dairy Commission increased prices paid to farmers in February 2022.
The price of cereal rose faster at 14.8 per cent year-over-year, as did fish and seafood at 7.4 per cent.
Fruit juice prices saw a dramatic rise in February, with a 15.7 per cent increase year-over-year compared with a 5.2 per cent hike in January. StatsCan said the jump was led by higher prices for orange juice due to orange supply impacts from disease and climate-related events like Hurricane Ian.
The annual pace of inflation cooled overall in February with the largest deceleration since April 2020, with the consumer price index up 5.2 per cent year-over-year.
Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, said the numbers are “reassuring” and suggest persistently high food inflation is starting to ease – though he noted that the 9.7 per cent overall food inflation number may feel “more like an illusion” to people still being squeezed by high grocery shelf prices.
Charlebois said he expects Canada’s slowing inflation pace will eventually even out and extend to food prices.
“We are expecting the food inflation rate to continue to drop as we go through the spring and into the summer,” he said in a telephone interview.
Tuesday’s numbers suggest that anticipated trend is starting to take effect, Charlebois said, noting that the world is starting to adjust to factors that brought on “the perfect food inflation storm” a year ago with the Russian invasion of Ukraine, as well as supply chain and labour challenges.
“I think what the numbers are telling us today is that the food inflation storm is really coming to an end.”