Gas prices behind 8.1 per cent inflationary increase in June
In January 1983, the last time Canadians were coping with inflationary levels that topped 8 per cent, the top song on the charts was about passing a joint, the Dukes of Hazzard was on TV, and gas prices were the equivalent of $1.16 a litre.
According to Statistics Canada’s Consumer Price Index report for June, inflation rose 8.1 per cent, the most significant year-over-year increase since the Musical Youth topped the charts and the Duke family adored the walls of teenage bedrooms.
The report showed at least three per cent increases in seven of eight price categories, but gas prices propelled inflationary growth in June.
Consumers paid 54.6 per cent more for gas than they did a year ago, up 0.7 percentage points from May. Global demand outpaced supply in the first week of June as COVID-19 restrictions eased in China. Over the remaining weeks, it eased as fears of a worldwide economic slowdown began to take shape.
Excluding gas, inflation still rose 6.5 per cent following a 6.3 per cent increase the month before.
Canadian wages are, on average, up 5.2 per cent an hour more over last year, not enough to keep up with inflation as the cost of passenger vehicles rose 8.2 per cent, services by 5.2 per cent, and food by 8.8 per cent.
The only category that saw a drop in inflationary pressure was shelter costs. It rose 12.2 per cent, down from 14.8 in May after the Bank of Canada hiked its key interest rate by a full percentage point.
June’s jump is not unexpected. Last month, while making that announcement, the Bank of Canada suggested a rate of eight per cent could persist for months.
The official opposition in Ottawa quickly criticized the Liberal government over Wednesday’s results, warning of a “Liberal-made recession on the horizon.”
“The Trudeau Liberals continue to ignore the cost-of-living crisis, have continued their out-of-control spending, and have made life less affordable for Canadian families,” read a joint statement from MPs Dan Albas and Gerard Deltell, the Conservative’s Shadow Ministers for Finance and Innovation, Science and Industry.
“Despite economists pointing out that the Trudeau Liberals can directly reduce inflationary pressures by reducing government spending, they, along with their partners in the NDP, have doubled down on new spending, continue to blame global factors for inflation, and refuse to take responsibility for their failures at home,” continued the statement.
All G7 countries contended with higher inflation in June. The United Kingdom, once again, had the highest rate at 12.7 per cent, while in the U.S., it was 9.1 per cent.